Escrow Timeline and Escrow Tips
Many clients ask me, “What will be the timeline for my escrow?” Escrow times vary but most escrows close in 30 days, though the length should be agreeable to both the buyer and the seller. The timeline of your escrow starts the day after the seller has accepted the buyer's offer, or the buyer has accepted the seller's last counter offer.
- The listing agent opens escrow.
- The escrow company assigns an escrow number.
- The buyer sends the lender a copy of the contract and the approval process begins.
- The buyer’s agent orders a home inspection.
- The buyer must send their deposit to escrow by personal check or wire by today.
- The escrow company orders Home Owner’s Association documents and sends initial escrow
- instructions to the buyer and seller along with information about the transaction.
- The listing agent schedules a termite inspection.
Day 3 – 10
- All buyer’s inspections are done, reviewed, then a request for repairs is written.
- All seller disclosures are completed and sent to the buyer for review.
- The lender’s appraisal is completed and reviewed by the lender, and then the lender sends it to
- the buyer.
- The seller and buyer agree on what repairs will be completed by the seller.
- If the appraisal is lower than the purchase price, an adjustment may be requested by the buyer.
- If all previous steps are acceptable, the buyer signs the contingency release. If any items can not be
- released, the buyer can request an extension.
- The seller completes the repairs and the termite company treats any pest damage.
5 days before closing
- The buyer does a final walk through.
- The bank sends loan documents to escrow for the buyer’s signature.
3 days before closing
- Buyer and seller sign closing documents and buyer deposits necessary closing funds.
Close of escrow
- Escrow disburses all funds.
- Escrow closes and the sale is recorded.
0-3 days after closing
- Seller moves out, keys are transferred, buyer moves in.
Tip 1 - For buyers - Clean up your bank accounts
Before starting home purchases, most smart buyers check their credit report, which is a great thing to do. But most do not realize that they have to create a clean bill of health for their bank accounts, too. The mortgage underwriters will require a minimum of two months bank statements for any account from which deposit, down payment of closing costs will be paid. Every single deposit and withdrawal will be scrutinized. So I advise buyers to make any cash transfers in advance. If a family member or friend is going to contribute some money towards the purchase, it needs to be in your account before this 2 entire months bank statement period. Most lenders allow a "gift" of up to $10,000 per person, but I strongly advise against doing it this way, because this requires extensive investigations of the gifter's bank accounts as well.
Note that all transfers of funds listed on your loan application and credit report, must occur in those bank accounts, such as: regular and/or self-emplyment income; alimony; rental receipts if you have rental property; mortgage or rent payments; car payments; credit card payments, etc.
Tip 2 - For buyers - How to buy a regular family home in this tough seller's market
Zone in on your target neighborhoods, but be flexible enough to move outside this if an opportunity presents itself. Don't try to go and see every new listing that looks interesting; by the time you get an appointment to see it, it will probably be sold. The smart strategy is to have your complete offer file ready, then make offers on the first day on market, on every property that has the potential to work for you. If they accept your offer, then we have a 17-day inspection period during which we can see it, then if you like it, get an inspector to provide a report of its current condition.
At any time during this period you can withdraw your offer with no cost to you, except for the inspection or appraisal fee. You can also ask for an adjustment from your offer price for repairs or condition.
Your timeline may change based on varying circumstances.
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