Escrow is one of the more confusing aspects of a home sale. How long does escrow take? Should you be using an escrow timeline? What are the steps?
Every home sale is different, but in general, escrow usually takes between 30 to 60 days from start to close.
During contract negotiation, you and the buyer agree to an escrow timeline. That timeline includes:
- Mortgage approval
- Home inspection
- Disclosure review
- Making repairs
- Meeting or removing contingencies
- Final walkthrough
You can think of an escrow timeline as a general timeline for closing on a house, since escrow begins as soon as you sign an offer and ends when the property changes hands.
Sellers want buyers to stick to a timeline because fast sales are optimal. Likewise, sellers should also stick to an efficient escrow timeline so they don't lose the buyer.
If you're selling your home, the best way to make sure everything goes smoothly is to hire a good real estate agent. To do so, we recommend our friends at Clever Real Estate because you can also save some serious cash.
Clever is a nationwide low commission brokerage that can match you with top performing local agents who can sell your house for just a 1% fee! You'll get the full service of a traditional agent at a fraction of the 2.5-3% price that traditional agents charge.
How Escrow Works
Before selling your home, you will want to make sure the escrow process is as stress-free as possible. In order to do that, use a licensed and qualified escrow agent. Typically, your real estate agent will know one.
California is a unique state where the title company is typically separate from the escrow company. However, in some areas of Northern California, most notably the Bay Area & San Francisco, it’s more common that the title company processes the escrow internally.
In attorney states like Illinois and Georgia, an attorney takes the place of the escrow agent.
Regardless of where you’re selling your home there are mandatory closing costs. That includes:
The purchase contract will dictate who pays other closing costs (buyer or seller). However, in practice, most areas have a typical protocol for what’s standard. For example, In northern and southern California, the buyer usually pays for title insurance. Throughout the country, it's customary for the buyer to pay for the lender's title insurance.
Keep reading to learn more about what to expect and how long escrow takes.
Escrow Process Timeline
Within the first week of escrow, you’ll have many documents to fill out, including disclosures regarding the home, a property questionnaire, and agency disclosures just to name a few.
The escrow timeline is usually between 30 and 60 days, although shorter sales can happen with a cash buyer. Longer timelines can occur if the sale is complex or the buyer has trouble finding financing.
Day 1: Pre-Escrow
Escrow starts once an offer to buy the property has been accepted by the seller and a purchase agreement contract has been signed.
Day 2-5: Escrow Is Funded
Before you go any further, escrow has to be funded. That means a fraction of the down payment (referred to as earnest money deposit) is deposited into the escrow account by the buyer’s real estate agent. This ensures the buyers put some skin in the game, demonstrating their seriousness about the purchase.
Your escrow officer will send you your specific escrow instructions. Typically, the package will include your grant deed to notarize, escrow instructions to sign, commission instructions, tax forms, statement of information, and payout documentation.
The seller must get these documents back to escrow in a timely manner in order for escrow, title, and the lender to process.
Day 3-20: Disclosures and Inspections
The buyers perform their due diligence and investigations on the property. The home must be available for the buyer during this time period. The seller must also keep on all the utilities through the close of escrow. The buyer receives a list of disclosures about the house or property as mandated by state law.
The disclosures provide information on known problems or defects for that area or age of house, such as a leaky roof or flood insurance. Disclosures:
- Benefit buyers because they'll know what faults the property has.
- Benefit sellers because they believe the known faults were built into the agreed upon price by the buyer, which can help solidify the asking price.
Home inspections happen next. These can include general contractor inspections, pest inspections, roof and chimney inspections, foundation inspections and sewer inspections to see if any or all of these systems have issues that require repair.
Day 20+: Price Negotiations
Following inspections, the buyer could submit a Request for Repairs, which will either ask the seller to repair an issue or give a credit based on the findings of their inspection. Once a decision has been made, the buyer signs the inspection results, thus removing their inspection contingency.
At this point in escrow, the buyer cannot pull out of the transaction without losing the deposit, unless the home does not appraise or the buyer cannot get a loan. The seller has the option of agreeing to the repairs or they may negotiate the price down to compensate for needed repairs.
If the buyer’s offer includes an appraisal contingency, an appraiser will come out to the property. As a standard of California law, every home must be properly fitted with smoke detectors, carbon monoxide detectors and the water heater must be double strapped. The appraiser will check for this. During this visit, they will be taking notes on the property, measuring square footage, and lot size to ensure it matches the tax assessor information.
In other states and with certain loans or lenders, a termite inspection may be required if the home inspector suspects termites. Typically the buyer has to pay for termite remediation, although the seller could negotiate credits at closing.
Negotiations can be tricky. If you want your home to sell for top dollar, you'll need a good agent in your corner. We recommend our friends at Clever. Clever will pair you with top-performing agents who can sell your house for just 1%. Traditional agents charge 2.5-3% — you'll save thousands by going with a Clever agent, and you'll get the full service of a traditional agent.
Day 24+: Buyer secures funding
In the next part of the process, nearly all of the work must be done by the buyer. Appraisals must be completed, homeowner’s insurance must be secured and funding must be approved by the buyer’s lender. At this point, once financing is secured, the loan contingency will be removed.
Title Searches and Insurance
Once all financing and other requirements finish, it’s time for closing.
First, the title company runs a title search. Most contracts state that the seller must provide a free and clear title to the buyer.
Next, the buyer may secure title insurance. Title insurance is not required for cash transactions, although most buyers want a title insurance policy to protect their interest in the title. If a buyer utilizes financing, the lender will most likely require title insurance. The buyer runs a final title search to make sure the title is considered free and clear.
Finally, the buyer’s lender sends the final loan documents to the escrow agent or attorney for the seller.
Final 5 Days: Close of Escrow
The buyer will do a final walk-through to make sure the home is in the same condition as when the offer was made. The buyer will also check if all the necessary repairs were made from the Request for Repairs, if any.
Assuming all goes well, both buyer and seller will sign one of the final forms known as the Verification of Property. The buyer then finishes paying the down payment, closing costs and other expenses to the escrow agent. Once the deed is recorded, the funds are disbursed, escrow ends.
Additional Escrow Resources
- Escrow Checklist for Sellers. With so moving parts, sellers find it helpful to have a thorough checklist that helps guide them through the escrow process. Use this list as a resource to simplify your home sale.
- Escrow Checklist for Buyers. For buyers, the escrow process differs from that of the sellers’. Use this checklist as a resource in navigating escrow as you purchase your next home.
- 10 Steps to Successfully Close Escrow. This post explains how escrow works, what’s involved, and what you can expect throughout each of the stages of escrow.
- Escrow Fees: Defined & Explained. There are a number of fees involved in a real estate sale, including the escrow fee. This post explains what an escrow fee is, what it costs and who pays for it.
It helps to be prepared for a home sale so there are no surprises. But knowledge alone won't get you top dollar for your property — you'll need an agent for that. Clever can help. Our friends at Clever can match you with top-performing agents near you who can handle negotiations and help sell your home for maximum value. Clever is free and there's no obligation to continue if you don't find an agent you love — but we think you will!
Interested in buying or selling?
We've improved the traditional real estate model with modern technology to cut costs, not quality.Get started today
Posted in Selling a House
- Selling a House (177)
- Buying a House (70)
- Real Estate Investing (67)
- Preparing to Sell Your Home (43)
- Real Estate Negotiations (27)
- Home Improvement (26)
- Investment Property (24)
- Homeowner How-To's (21)
- Listing Your Home (21)
- Marketing Your Home (20)
- For Sale By Owner (15)
- Homeowner Advice (15)
- Mortgage (15)
- House Flipping (14)
- Home Value (13)
- Homeowner Hacks (13)
- Personal Finance (13)
- Home Showings (13)
- Closing on a House (12)
- Escrow (12)
- How to Think Like a Realtor for a Successful Sale
- 7 Reasons Why Selling a House in the Winter Is Actually a Good Idea
- Awesome Resources for Buying (or Selling) a House in the Military
- Navigate the Escrow Timeline With These Helpful Tips and Resources
- Boost Your Home's Value With 5 Eco-Friendly Upgrades