Escrow 101 ~ The ABC’s of Escrow

Escrow 101 is like the kindergarten of real estate, yet kindergarten was a place of learning for most of us at one time.

Some  feel everything they need to know they learned in kindergarten, so if that analogy works for you grab a warm cookie and glass of milk this will only take a few minutes.

You’ve heard the saying “the house fell out of escrow” or “we’re waiting for escrow to close” it seems like escrow is something that happens to you, so what does escrow mean to a buyer or seller?

What is an escrow? An Escrow is an arrangement in which an impartial “third party”, called an escrow holder (generally the Escrow Officer), holds legal documents and money on behalf of a buyer and a seller, and distributes them according to the buyer’s and seller’s mutual instructions.

  • Only the principals to the transaction are entitled to the information concerning the escrow.
  • The term “escrow” has come to mean “neutral protection” for the seller, the lender and the buyer.
  • All parties involved in the transfer of real property are supposed to be impartially protected during the transaction.

Who can do an escrow: The escrow holder may be any disinterested third party, and not all escrow companies are all the same.

  • Some maybe licensed by the state and others may not.
  • Depending on the laws of your state, the guidelines/regulations can differ, and some may afford consumers more protection than others.

Escrow officers with established firms generally are experienced and trained in real estate  working directly with the buyer’s lender for the new loan if applicable, in addition co-ordinating with the title  insurance company for seller payoff compliance, homeowner associations, etc. etc.

It’s also important to note that the escrow company/escrow officer while wanting you to place nice in the payground, they do not make buyer/seller decisions for you, this may be contrary to the belief of consumers.

So kindergarten basics work here,… be nice and don’t throw sand, if something goes wrong… it’s not always the fault of the escrow officer. They do they can for you, while complying with the complexities legal settlement procedures…and thanks for coming to class today at

  • If you like what you see, or have learned something here, please leave us a comment.

Written by Class Instructor: Lynda Eisenmann

I maintains an active residential re-sale brokerage in Brea, CA, located in Orange County, about 20 minutes north of Disneyland. Contact Lynda directly at (714) 595-1494, or Lynda@PreferredHomeBrokers.comCA License #00402040

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