How Does Escrow Work?

By Home Bay

Posted on November 16th, 2014

Wondering what escrow is, how it works, who is involved and what impact it has on your home sale? Read this for a short and sweet explanation.

Seller Questions


Some asset (in real estate, typically cash or a deed) that is held by an independent third party. The assets will only be delivered to the other party once certain agreed upon conditions have been met. The escrow process is necessary because each party in a real estate transaction wants to know that neither the funds nor the property will change hands until all conditions of the escrow instructions have been met.

  • The buyer does not want to release cash to the seller until the seller has delivered the deed with clear title.
  • The seller does not want to transfer the deed until they have proof of the buyer's payment in full.
  • The lender does not want to fund the loan until all mortgage documents have been signed and the deed is ready to be transferred.

Escrow Agent:

An escrow agent is a third party that stores the asset, ensures the conditions have been met and coordinates the asset's delivery once all parties agree. This person safeguards the real estate transaction funds and documents. They disburse the funds and convey the title when all the provisions of the escrow process have been followed.

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Posted in Escrow