Congratulations! If you're reading this, it means you've accepted an offer on your home. You're now on the path to closing the deal. In this post, we will walk you through the entire escrow process, highlighting the key steps and what to expect at each stage.
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Step 1: Earnest Money Deposit (EMD)
The first order of business is the Earnest Money Deposit (EMD). This is a significant step, as it signifies the buyer's commitment. Typically, the deposit should be received by the escrow company within one business day of offer acceptance. This deposit is often wired to the escrow company.
Step 2: Escrow Begins
Once the EMD is in place, escrow officially commences. The title and escrow companies, often the same entity, start gathering all the necessary information to close the transaction. This is the phase when the buyer's due diligence occurs, including inspections.
Step 3: Buyer's Due Diligence
Buyers will conduct inspections and possibly make additional requests. Even if the offer is non-contingent, inspections help ensure that the property's condition matches expectations.
Step 4: Escrow Timeline
Here's a summary of the steps involved in the coming weeks:
- Contract Acceptance
- Deposit Wired to Escrow
- Appraisal Ordered and Scheduled
- Buyer Investigations
- Complete Title Company Paperwork
- Appraisal Report
- Loan Conditions Satisfied
- Loan Approval
- Schedule Seller Sign-Off
- Seller Signs Escrow Paperwork
- Buyer’s Closing Disclosure Sent to Escrow
- Buyer’s Loan Docs Delivered to Escrow
- Buyers Sign Closing Documents
- Buyer Brings Remaining Down Payment Funds to Escrow
- Buyer Conducts Final Walk-Through of Property
- Lender Funds Loan
- Seller Leaves All Keys and Documentation for Property
- Escrow Closes
Most of these steps are primarily the buyer's responsibility, with the seller focusing on signing escrow paperwork and preparing to vacate the property.
Step 5: Required Transaction Paperwork
In the weeks leading up to closing, you'll review and confirm that all necessary paperwork is in order. If additional forms require your signature, these will be sent via DocuSign for your convenience.
Step 6: Escrow/Title Paperwork
You'll receive a request for information from the title company, which is vital for completing title searches and arranging loan payoffs. Timely submission of this information helps prevent delays.
Step 7: Mortgage Payments and Property Taxes
Regarding mortgage payments and property taxes, consider your closing date in relation to the due dates to avoid penalties. Pay close attention to your mortgage statement's grace period if your closing date is around the 15th of the month or near property tax due dates.
Step 8: Appraisal for Buyer’s Lender
The buyer's lender orders an appraisal, which involves a property inspection. This step ensures that the property meets required safety standards, including smoke detectors, CO detectors, and properly strapped water heaters.
Step 9: Communication
Throughout the process, you'll receive regular updates on the transaction's progress.
Step 10: Schedule Seller’s Sign-Off with Notary
In California, sellers sign escrow paperwork before closing. Ensure your documents are in order and expect to sign days or weeks before the actual closing date. Some documents will require notarization.
Step 11: Buyer’s Loan Documents & Closing
Buyer's loan documents generally reach escrow 3-5 days prior to close. Any delays in these documents may result in a delayed closing.
Step 12: Buyer’s Walk-Through
A few days before closing, the buyer will likely do a walk-through to verify the condition of the property.
Step 13: Utilities Transfer & Insurance Cancellation
As we approach the close of escrow and we are certain there will be no delays, typically once the buyer's loan docs are in title or the loan has been funded you should be able to schedule the utilities to transfer.
Step 14: Closing
Once the transaction is officially closed, you can cancel any property insurance policies. You'll receive confirmation from the county that the transaction is complete.
Please do not cancel insurance policies until escrow has closed.
Summary of Communication
Throughout the escrow process, we will provide you with regular updates to ensure you are well-informed. Here's a summary of the communication schedule:
Week 1 - one week after offer:
- Potential date for appraisal
- Confirm you have received the escrow package from Lawyers title
Week 2 - 2nd week in escrow:
- Confirm you have completed and returned the escrow package from Lawyers title
- Status of the loan
Week 3 - 3rd week in escrow:
- Confirm escrow has reached out for the seller's signing appointment
- Status of loan docs
Week 4 - 4th week in escrow:
- Buyer’s Loan Docs Are in Title
- Buyer Signs Loan Docs
- Buyer’s Loan Funds
- Property is Recorded
- If at any time you have any questions or concerns, please do not hesitate to reach out to us.
Step 15: Post-Closing
If you're occupying the home after the closing, we will be coordinating the transfer of occupancy to the new owners.
The escrow process is multi-faceted, and no two transactions are identical. Rest assured, we are here to guide you through each step, provide regular updates, and address any questions or concerns you may have. Your peace of mind and a smooth transaction