Congratulations to you! Perhaps, you just accepted an offer for your home which prompted you to read this article, or having thoughts about selling your home and doing some research about the process. Maybe you’re wondering how long should the process take and what happens next? Where are you on the process? The answer depends, every home sale varies. It’s safe to say that, generally, escrow takes around 30 to 60 days to close. On the negotiation of the contract, you and the buyer usually agree on an escrow timeline.
To ensure a stress-free escrow process, hire a qualified and licensed escrow agent. California is a unique state where the escrow company is separate from the Title company. Some areas in northern California, mostly the San Francisco and the Bay Area, the escrow is processed internally by the Title company. Some other states like Georgia and Illinois, escrow is processed by an attorney.
Get yourself fully informed about escrow since the term not commonly used in other states as it is in California. Escrow can vary depending on the state where the transaction occurs. Know what ‘escrow refers to in your state.
Regardless of your home-selling options, closing costs are mandatory. You’re gonna have to pay for property taxes, escrow fees, Title Insurance fees, Transfer Taxes, etc. The other closing costs will be paid by either the seller or the buyer depending on the purchase contract.
Standard protocols, too, can vary depending in the area.
Here’s what you can expect about the escrow process:
The first week of escrow is comprised of filling out documents like agency disclosures, property questionnaires, and disclosures on your home to name a few.
Let’s start with day 1. This is the pre-escrow where the seller has accepted the offer to buy the property and the agreement for the purchase is signed. The escrow will then, begin.
On the 2nd to the fifth day, the escrow needs to be funded with a fraction of the buyer’s down payment. Here, the home buyer’s real estate agent will deposit on the escrow account. This is done for the buyers to show their interest in purchasing the property which will be followed by your escrow officer sending you specific escrow instructions. The package, typically, includes payout documentation, escrow instruction to sign, your grant deed to notarize, Statement of Information, commission instructions, and tax forms. As a seller, you must get these back to escrow in a timely manner for the title, escrow, and lender to process.
The Inspections and disclosures happen around day 3-20 where the buyers investigate your property. You must make your property available in this period and keep the utilities until the close of escrow. A list of disclosures will be received by the buyer, as mandated by the law, about the home or property. The disclosures include information about defects or known problems of the house, its age, or flood insurance, and the likes. This will be beneficial to the homebuyers, knowing the faults about the property. On the side of the seller, this is beneficial because of the belief that the faults were built into the price that’s been agreed upon.
Next in line would be the inspection that’ll happen including the pest inspections, foundation inspection, sewer inspections, general contractor inspections, roof and chimney inspections to figure out issues within these systems that need repair.
A request for Repairs could be submitted following the inspection on day 20 asking for a repair or to give credit on the inspection findings. The buyer will then sign the result of inspection after the decision made, therefore inspection contingency is removed. The buyer won’t be able to back away from the transaction without losing the deposit unless the buyer cannot get a loan or the home does not appraise. We are now at the point where the seller could either agree on the repairs or let the price go down to compensate for the repairs needed.
Here’s what will happen if an appraisal contingency is included in the buyer’s offer. The appraiser will check the property for carbon monoxide detectors, smoke detectors, and double strapped water heaters as a standard for the California law. They will take note about the lot size and measure the square footage to match it with the information from the tax assessor.
Around day 24 or so, the buyer will secure a funding, the buyer will be doing all the work here. The lender must approve the funding needed by the buyer, appraisals must be complete, and the homeowner’s insurance must be secured. The loan contingency will be removed following the secured financing.
The closing will happen once the requirements and other financing are finished.
A free and clear title must be provided to the buyer as stated in most contracts which is why the Title Company runs the Title search first. Most buyers want to protect their interest by purchasing a title insurance policy. This is the next step. It may not be required for transactions dealt in cash but it provides protection to them. The lender will require a title insurance if the financing is utilized by the buyer. A final title search is also done by the buyer just to be sure that the title is clear and free.
Lastly, the final loan documents will be sent by the buyer’s lender to the attorney of the seller or the escrow agent.
This happens within the last 5 days of the process. A final walk-through will be done by the buyer to the home about to be purchased is maintained just as it was when the offer was made. There will still be a need to check if the Request for repairs has been followed through.
Assuming there are no other issues found, the final forms, otherwise known as the Verification of Property will be signed by both the buyer and the seller. The down payment will be paid by the buyer along with the other payments needed and the escrow agent. The closing completes when the deed is recorded and the funds necessary is disbursed.
How did you find the Escrow process?