WHAT HAPPENS DURING ESCROW IN CALIFORNIA?

Buying a home is exciting, but once your offer is accepted, many buyers wonder, "What happens next?"

The answer is escrow.

Escrow is the period between the acceptance of an offer and the final transfer of ownership. During this time, buyers, sellers, lenders, escrow officers, title companies, and real estate agents work together to complete all the steps necessary to close the transaction.

If you're buying a home in Ventura County, Los Angeles County, or elsewhere in California, understanding the escrow process can help you feel more confident and prepared.

What Is Escrow?

Escrow is a neutral third-party process that helps ensure all terms of the purchase agreement are completed before ownership changes hands.

The escrow company holds important items such as:

• The buyer's earnest money deposit
• Purchase funds
• Loan documents
• Signed closing documents

The escrow officer does not represent either the buyer or seller. Their role is to ensure that all instructions are followed and that the transaction is completed properly.

Step 1: Opening Escrow

Once the seller accepts the buyer's offer, escrow is officially opened.

At this point:

• The purchase contract is delivered to escrow.
• The buyer deposits their earnest money.
• Escrow instructions are prepared.
• The title company begins its review of the property's ownership history.

This is the official starting point of the transaction.

Step 2: Initial Disclosures and Reports

Early in escrow, the seller provides disclosures regarding the property.

These may include:

• Transfer Disclosure Statement (TDS)
• Seller Property Questionnaire (SPQ)
• Natural Hazard Disclosure (NHD)
• Lead-Based Paint Disclosure (for older homes)
• Preliminary Title Report
• HOA documents (if applicable)

Buyers should carefully review all disclosures and ask questions about anything they do not understand.

One of the most important parts of escrow is learning as much as possible about the property before removing contingencies.

Step 3: Home Inspections

Most buyers schedule inspections shortly after opening escrow.

Common inspections include:

• General home inspection
• Roof inspection
• Sewer line inspection
• Pest inspection
• Chimney inspection
• Pool and spa inspection

The goal is to identify potential issues before finalizing the purchase.

Many homes have at least some deferred maintenance. The key is understanding what repairs may be needed and whether they are acceptable to the buyer.

Step 4: Negotiating Repairs or Credits

After inspections are completed, buyers may request repairs or credits from the seller.

Possible outcomes include:

• Seller agrees to make repairs
• Seller provides a credit toward closing costs
• Buyer accepts the property as-is
• Buyer and seller negotiate a compromise

Not every transaction involves repair negotiations, but it is common for discussions to occur after inspections are reviewed.

Step 5: Loan Processing and Underwriting

If the buyer is obtaining financing, the lender continues reviewing the loan file during escrow.

This process includes:

• Employment verification
• Income verification
• Asset verification
• Credit review
• Underwriting approval

The lender may request additional documents throughout escrow.

A common mistake buyers make is making major financial changes before closing. During escrow, buyers should avoid:

• Opening new credit accounts
• Financing vehicles or large purchases
• Changing jobs
• Making large unexplained deposits

Keeping finances stable helps avoid unnecessary delays.

Step 6: Property Appraisal

The lender will typically order an appraisal to confirm the property's market value.

The appraiser evaluates:

• Property condition
• Location
• Comparable sales
• Market trends

If the property appraises at or above the purchase price, the transaction generally continues as planned.

If the appraisal comes in below the purchase price, the parties may need to renegotiate pricing or terms.

Step 7: Reviewing Title

The title company conducts a title search to confirm ownership and identify any issues that may affect the property.

The title review looks for:

• Liens
• Judgments
• Easements
• Ownership disputes
• Recorded restrictions

The goal is to ensure the buyer receives clear title when the transaction closes.

Title insurance is also arranged during this stage.

Step 8: Removing Contingencies

Most California purchase contracts include contingencies that protect the buyer.

Common contingencies include:

• Inspection contingency
• Appraisal contingency
• Loan contingency

Once buyers are satisfied with inspections, disclosures, financing, and other due diligence, they may remove their contingencies.

Removing contingencies is an important milestone because it signals that the transaction is moving toward closing.

Step 9: Signing Closing Documents

Near the end of escrow, buyers and sellers sign final documents.

Buyers typically sign:

• Loan documents
• Escrow instructions
• Closing disclosures
• Title-related documents

At this point, buyers also wire their remaining down payment and closing funds to escrow.

Step 10: Final Walk-Through

Shortly before closing, buyers perform a final walk-through of the property.

The purpose is to verify:

• The home is in substantially the same condition as when purchased.
• Agreed-upon repairs have been completed.
• Included fixtures and appliances remain.
• No new issues have appeared.

The final walk-through is not another inspection but rather a final verification of the property's condition.

Step 11: Funding and Recording

After all documents have been signed and loan conditions have been satisfied:

• The lender funds the loan.
• Escrow distributes funds.
• The county records the deed.
• Ownership officially transfers to the buyer.

Once recording is confirmed, the transaction is officially closed.

When Do Buyers Get the Keys?

In most California transactions, buyers receive their keys after the transaction records with the county.

This often occurs on the same day as closing, although possession terms can vary depending on the purchase agreement.

How Long Does Escrow Take in California?

While every transaction is different, many California escrows close within 21 to 30 days.

The timeline can vary depending on:

• Loan type
• Inspection issues
• Appraisal timing
• Title matters
• Buyer and seller negotiations

Cash transactions can often close more quickly.

Tips for a Smooth Escrow

To help keep your transaction on track:

• Submit requested lender documents promptly.
• Schedule inspections early.
• Review disclosures carefully.
• Stay in close communication with your agent and lender.
• Avoid major financial changes until after closing.
• Ask questions whenever something is unclear.

The more proactive everyone is, the smoother the process tends to be.

Final Thoughts

Escrow is where much of the important work happens during a real estate transaction. Although there are many moving parts, the process is designed to protect both buyers and sellers while ensuring all contractual obligations are met before ownership transfers.

Understanding what happens during escrow can help reduce uncertainty and allow you to move forward with confidence.

If you're considering buying a home in Ventura County or Los Angeles County and have questions about the escrow process, I'm always happy to help explain the steps and guide you through the transaction from start to finish.