Find An Agent

An In-Depth Breakdown of the Steps to Close Escrow

Closing escrow takes a lot of time and coordination. Inspections and negotiations can drag on for a while. The best way to ensure an ideal outcome is to work with an experienced local agent.
An In-Depth Breakdown of the Steps to Close Escrow

When a home is in escrow, the home is held as an asset by a third party until all the terms in the contract are met. The neutral third party will be a bank, an escrow agent, or a title agent. They'll create an account to hold the “earnest money,” a required deposit that buyers put down to say to sellers they're serious about making a deal.

You'll want to work with a top, local agent to help you through this sometimes complex process and make sure you'll got all your ducks in a row.

Even with an experienced agent in your corner to advise you, the whole process can be overwhelming from start to finish. Here's what to do to get through the escrow process and close smoothly.

Inspections and Appraisals

After a buyer puts down earnest money, they usually have the right to hire an inspector to look for issues in the home. In some cases, home sellers will ask buyers to agree to an “as is” deal or will only agree to sell without an inspection. This is usually a bad deal for buyers.

Most lenders require buyers to have a home inspected and appraised before they'll agree to lend money. A lender doesn't want to get stuck holding a bill on a home that a buyer abandoned because it was riddled with issues.

Issues may need to be resolved before the lender will agree to a mortgage. If the inspector finds problems during the inspection, a buyer can often ask for seller credits to offset the costs to repair any issues. Sellers who want to ensure that they're not getting taken for a ride can ask buyers to sign an addendum stating that any credits offered are only meant for repairs for problems listed.

Buyers Complete Their Application

Buyers need to go through the application and approval process, giving their lender access to all of their financial information and recent history. Tax returns, pay stubs, bank statements, and any other holdings should be reported when applying for a mortgage. While each lender is different, they'll have a checklist of the necessary documentation to make things easier for buyers.

Buyers are advised to have gotten pre-approved before searching for a home. This assures sellers that any bids that are offered can be backed up. It also allows buyers to get locked into a rate in case of any market fluctuations.

Buyers Need Title and Homeowners Insurance

As soon as the home is in escrow, the buyer should seek out title or hazard insurance. Working with a title agent to perform a title search is another method to protect the buyer's claim on a home.

During this period, buyers will search for lingering issues, so sellers are advised to deal with any liens, debt, or issues with the home in advance. Once a title search is performed, no one else can make a claim on the property.

Closing Documents Are Prepared

The formal closing date and time are sent by the escrow or title agent to both parties. This formal notice will include a list of what each party needs to bring to the closing.

Buyers will get a closing disclosure outlining details about their loans. There will be a list of closing costs provided to each party. Remember that closing costs can add up to around 5% of the final sale price, so make sure that money is available to seal the deal.

While some sellers may agree to pay closing costs, each party should speak to their agent about what is standard and what they should be prepared to pay. The best time to agree on who pays what for closing fees is during the contract phase.

Perform the Final Walkthrough

The day before the closing, some buyers want to conduct a final walkthrough. If there were repairs that were agreed to, the buyer can check and ensure that they've been completed. It's also each party's final chance to ask any questions or back out in extreme cases.

If everything in the purchase contract is intact inside the home, the deposit in the escrow account is going to be applied toward the down payment. The next day, the remaining down payment will be due.

The Signing

In some states, both parties sit down with their agents or lawyers at a formal meeting. In other cases, all of this business can be handled remotely. Either way, the last step is to get ink on the contract and hand over keys.

Both parties should look through fine print and clear up any details. Buyers should also double-check their interest rate. Sellers will want to ensure no addendums are added to the contract keeping them liable for any issues after the keys are handed over.

Let an Experienced Local Agent Make Escrow a Breeze

When you're trying to handle all the legalese and jump through all the hoops necessary during escrow, it's easy to be overwhelmed. That's why having an experienced local agent in your corner is your best bet.

Working with a Clever Partner Agent brings added bonuses for buyers and sellers. Not only do you get an expert negotiator in your corner, but sellers get a full-service agent for only 1% commission and buyers qualify for a $1,000 rebate to help cover closing costs (on homes over $150,000).

Fill out this form and we'll pair you with an experienced local agent who can make the process as stress-free as possible.


Andrew Schmeerbauch
Andrew Schmeerbauch

Andrew Schmeerbauch is the Director of Marketing at Clever Real Estate, the free online service that connects you top agents to save on commission. His focus is educating home buyers and sellers on navigating the complex world of real estate with confidence and ease. Andrew has worked on projects for the United Nations and USC and has a particular passion for investing and finance. Andrew's writing has been featured in Mashvisor, L&T, Ideal REI, and Rentometer.

See all Andrew's Posts

Sell Your Home with a Top Agent and Save Thousands

Learn how you could save thousands when you sell with Clever!

whats next house

Better real estate agents at a better rate

Enter your zip code to see if Clever has a partner agent in your area.

If you don't love your Clever partner agent, you can request to meet with another, or shake hands and go a different direction. We offer this because we're confident you're going to love working with a Clever Partner Agent.