{"id":16552,"date":"2020-05-11T06:48:08","date_gmt":"2020-05-11T13:48:08","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=16552"},"modified":"2026-04-03T08:33:27","modified_gmt":"2026-04-03T15:33:27","slug":"how-escrow-works","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/how-escrow-works\/","title":{"rendered":"How Does Escrow Work, and What Is the Seller\u2019s Job During this Time?"},"content":{"rendered":"

Curious about your role and responsibilities during escrow as a seller, and how on earth escrow works in general? While much of a seller\u2019s job throughout escrow is to hold tight as the buyer works through the details on their end, this guide will explain the basics of escrow and provide you with some easy tips for how you can help move the needle toward closing, too.<\/p>\n

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<\/a> Source: (Nathan Dumlao \/ Unsplash)<\/figcaption><\/figure>\n

What is escrow?<\/h2>\n

Phrases like \u201conce the home is in escrow\u201d or \u201cthe buyer\u2019s earnest money will go into escrow\u201d can raise a lot of confusion, especially if you\u2019re a first-time seller<\/a>. Sounds like a bunch of jargon! It helps to know that escrow has a couple of distinct but related meanings in real estate.<\/p>\n

Closing time<\/b><\/h3>\n

Escrow refers to a specific period of time in a real estate transaction between offer and close. Escrow kicks off after you sign the purchase agreement from a buyer, and it ends when all the funds are disbursed at closing.<\/p>\n

\u201cOnce we have a fully executed contract in which the buyer and seller both sign off on the particular offer, then the buyer is required to deposit \u2018earnest money\u2019 into the escrow company,\u201d says Ehren Alessi<\/a>, a top Las Vegas real estate agent who\u2019s sold 86% more single family homes than his peers.<\/p>\n

So begins escrow. Now, your home sale will circle the runway like a plane for at least several weeks. That\u2019s because most transactions hinge on meeting a number of contingencies laid out in the contract \u2014 like the inspection<\/a>, appraisal<\/a>, and title search<\/a> \u2014 and it takes time to meet these contingencies before closing.<\/p>\n

A third-party account for safekeeping<\/h3>\n

During this holding pattern, which can last 30-60 days<\/a>, a third-party escrow account will open up to safely hold any funds and key paperwork related to the transaction at an arm’s length. This may include, in addition to your buyer\u2019s earnest money, real estate fees, loan fees, third party payments, and your profits as the seller.
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To avoid any conflict of interest, an escrow officer or title company will manage the account. If you think of the alternative \u2014 you or the buyer personally hanging onto the money all that time \u2014 it\u2019s clear why no one would be comfortable moving forward without an escrow arrangement.<\/p>\n

But escrow isn\u2019t free. Escrow service fees which cover the holding of funds and transfer of documents may vary from state to state, and you and the buyer will likely split the costs<\/a>.<\/p>\n

What\u2019s the seller\u2019s job during escrow?<\/h2>\n

While the buyer works to finalize the details of their mortgage and schedule the home inspection, the seller should take care of the following:<\/p>\n

Prepare disclosures for your buyer<\/h3>\n

If you haven\u2019t already provided your buyer with necessary property disclosures that document any known issues about your house, you\u2019ll likely need to do so within a few days after you accept an offer as part of moving escrow forward. The seller\u2019s disclosure statement is a legally binding document<\/a>, so remember to:<\/p>\n