The Escrow Process for a Buyer has many steps and typically lasts 30-45 days. The escrow steps outlined below are a general overview on a customary experience for a home Buyer in the state of California. The information below focuses on soley the Buyer's escrow process experience. To see what a Seller experiences thru an escrow, go to Seller's Escrow Process. Along with the information on this page, a Buyer should always look to their Realtor for guidance throughout the entire escrow process from start to finish working as a great team together to successfully close the escrow.
ESCROW OPENS: Once purchase contract terms between Buyer and Seller are fully negotiated and agreed upon by all parties, the contract is considered to be fully executed and that final day of negotiations/acceptance starts the escrow process. The title company contractually agreed upon to handle the transaction is contacted by your Realtor and escrow is officially opened that day, or the next morning if final negotiations went late into the evening.
EARNEST MONEY DEPOSIT: Buyer is required to drop or wire their earnest money deposit (EMD) to the title company within 3 business days after offer acceptance. An EMD can typcially be between 1%-3% of the purchase offer price depending what is customary for your area and the amount would be indicated on page one of the purchase contract.
DISCLOSURES: Buyer will receive all the Seller disclosures and county reports for review within 7 days of contractual acceptance. HOA DOCUMENTS: If a Buyer is purchasing a home that has a Home Owner's Association (HOA), the title company will order all the HOA documents for the Buyer's review. Those are usually received by the Buyer within 10 days of contractual acceptance.
INSPECTIONS: Buyer has 17 days from acceptance to complete and review all inspections, reports, disclosures, and also to get Buyer's home owner’s insurance in place. The Buyer's Agent will normally be in charge of ordering all inspections for the Buyer. Typically a Whole House Inspection, Roof Inspection, and Pest Inspection will be performed. If the home has a pool, a pool inspection should be performed as well. Inspecting a home could be the single-most important process in buying a new home, as it ensures that the house is safe, secure, and problem free. Many other inspections are available to a Buyer. To learn all about home inspections, go to Home Inspections.
APPRAISAL: Buyer's lender will be in charge of ordering the appraisal, and the appraisal is part of the Buyer's closing costs. This is normally an “up front” fee so Buyer's need to expect to pay this out-of-pocket during escrow early in the escrow and the appraisal will be completed within the 17 day inspection escrow period.
REPAIR REQUEST: Once all inspections are completed within Buyer's 17 day inspection period, the Buyer may write up a ‘repair request’ for any health and safety issues that were found, or for item(s) not functioning properly. The Buyer's Realtor will go over those kinds of things with the Buyer before submitting the request in writing. Buyers would normally write this request nearing the end of Buyer's 17 day inspection period, or sooner. Seller has every right to accept or deny any repair requests made by the Buyer. On the flip side, the Buyer also has every right to cancel the escrow and take their earnest money deposit in full if the Buyer is not pleased with the condition of the home and the seller isn’t willing to take care of a repair(s) that concerns the Buyer.
DAY 17 – REMOVAL OF BUYER CONTINGENCIES: Once the Buyers has read all the disclosures, country reports, HOA docs, and seen the results of all the inspections, and the Buyer is satisfied with the condition of the property and the Buyer is happy with the Seller's response to the repair request, the Buyer will release all Buyer contingencies in writing (except for the loan contingency). Moving forward from here, the only contingencies remaining will be the loan contingency.
LOAN PROCESS & FINAL APPROVAL: Buyer has 21 days from contractual acceptance to get full and final approval with Buyer's lender according to the terms of the purchase contract. The Buyer should always remember that anytime the lender requests anything from the Buyer throughout the escrow process, always supply immediately. The escrow process and closing escrow on time depends heavily on the Buyer's final loan approval process.
DAY 21 – FINAL LOAN CONTINGENCY REMOVED: Once the Buyer's loan has been fully approved, Buyer will “release” the final loan contingency in writing at day 21. With all contingencies now removed, the escrow is officially on the “home stretch." NOTE: Because all the Buyer's contingencies will be removed from this point on, if a Buyer tries cancelling the contract after this point, the Buyer can no longer take their earnest money deposit with them. Seller keeps the EMD as recourse.
SIGN FINAL ESCROW/LOAN DOCUMENTS: At this time, Buyer's lender orders the final Loan Docs package and once the package is received at the Title Company, the Title Company will make an appointment with the Buyer to get all final paperwork signed at the Title Company - usually around 3-4 days before close of escrow date. Sometimes a lender can "table fund" which in that case a Buyer can sign papers as late as the same day as close of escrow date. All depends on the Buyer's lender and their procedures.
FINAL CASH DOWN PAYMENT: Buyer will need to get the remainder of their down payment to Title Company via wire transfer within 24 hours of scheduled closing of escrow. Buyers need to discuss wire transfer specifics directly with the escrow officer. Escrow officer will have that exact amount for the Buyer when Buyer signs all final escrow paperwork.
FINAL WALK THRU: Within 3 days of close of escrow, Buyers will do a final walk thru of the property to make sure home is in relatively the same condition as the first time Buyer first saw it, plus to make sure all repairs have been completed that were agreed upon, if any. Around this time, Buyer should start calling the utility companies to put those accounts into Buyer's name on close of escrow date.
ESCROW CLOSES: Escrow is officially closed when the county “records” the property into the Buyer's name. The Buyer's Agent will let the Buyer know when its official. Buyer will normally take possession of the property at 6:00pm the day the property closes escrow. However, Buyer should always check with their Realtor well ahead of time on what day/time Buyer is allowed they keys. The standard contractual time frame is 6pm on the day of close of escrow Buyer can take possession; however, sometimes those terms are negotiated differently in the contract, so Buyer should always double check with Realtor on when the Buyer can actually have the right to take possession. Welcome home!
Contact Cheri Elliott anytime if you have any further questions or real estate needs.