What Happens During Escrow? A Simple Step-by-Step Guide

If you've ever bought or sold a home in Los Angeles — or you're getting ready to — you've probably heard the word escrow thrown around constantly. And while most people have a general sense that it means "the deal is almost done," very few actually understand what's happening behind the scenes during those weeks.

That matters, because escrow is where deals either come together beautifully or fall completely apart. I've walked clients through escrow in everything from Montebello to Burbank to Anaheim, and the ones who understand the process tend to feel far less anxious — and make far better decisions — along the way.

So let's break it down. Here's exactly what happens during escrow, step by step, in plain language.

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First, What Is Escrow (and Who Manages It)?

Once a buyer and seller agree on terms and sign a purchase agreement, the transaction moves into escrow. Essentially, escrow is a neutral third-party process — managed by an escrow officer or escrow company — that holds funds, documents, and instructions until all conditions of the sale are met.

In California, escrow companies are licensed and regulated. Neither the buyer nor the seller controls the process — the escrow officer simply follows the written instructions from both sides and makes sure every condition is satisfied before money and property change hands.

Think of it as a very organized, legally protected handoff.

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Step 1: Opening Escrow and the Earnest Money Deposit

The escrow process officially begins when the signed purchase agreement is sent to the escrow company and the buyer submits their earnest money deposit — typically within three business days of acceptance.

This deposit shows the seller that the buyer is serious. It's held in an escrow account and applied toward the buyer's closing costs or down payment at the end.

One thing buyers often ask me: Is that money safe? Yes — it's held in a neutral account and cannot be released without both parties' agreement or specific contractual conditions being met.

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Step 2: Opening a Title Order

At the same time, a title search is ordered. A title company reviews public records to confirm that the seller actually has the legal right to sell the property, and that there are no outstanding liens, unpaid taxes, judgments, or other issues attached to the home.

This step is especially important in situations like probate sales or trust sales — which I specialize in — where ownership history can sometimes be more complex. A clean title is non-negotiable before escrow can close.

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Step 3: The Buyer's Inspections

This is one of the most active periods of escrow, and buyers should take it seriously. During the inspection period (typically 10–17 days in Southern California), the buyer has the right to investigate the property thoroughly.

Common inspections include:

• General home inspection — condition of the structure, roof, plumbing, electrical, HVAC
• Pest/termite inspection — required by many lenders
• Sewer line inspection — especially relevant in older LA neighborhoods like Highland Park or Boyle Heights
• Chimney, pool, or foundation inspections — depending on the property

After inspections, buyers can request repairs, ask for credits, or in some cases, cancel the contract based on what they find. This is where good negotiation really matters.

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Step 4: The Appraisal

If the buyer is financing the purchase (rather than paying cash), their lender will order an appraisal. An independent appraiser visits the property and determines its market value based on comparable sales in the area.

Why does this matter? Because a lender won't loan more than the appraised value of a home. If the home appraises below the purchase price, the buyer and seller have to figure out how to bridge that gap — whether through a price reduction, the buyer bringing extra cash, or sometimes a combination of both.

I've helped clients navigate low appraisals in competitive markets from Pasadena to Long Beach — and it's definitely manageable when both sides are communicating clearly.

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Step 5: Loan Approval and Underwriting

While inspections and appraisals are happening, the buyer's lender is working on final loan approval. The underwriter reviews everything — income, assets, credit, employment, and the property itself — before issuing a "clear to close."

This is the stage where buyers need to be especially careful. Do not make any major financial changes during escrow:

• Don't open new credit cards
• Don't buy a car
• Don't change jobs
• Don't make large, unexplained deposits into your bank account

Any of these can trigger delays — or worse, a denial. I always remind my buyers of this early in the process.

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Step 6: Contingency Removals

In California, the purchase contract typically includes contingencies — conditions that must be met for the sale to move forward. Common ones include the inspection contingency, the loan contingency, and the appraisal contingency.

Once the buyer is satisfied with inspections, the appraisal comes in on track, and the loan is approved, they formally remove contingencies in writing. This is a significant moment — it signals that the buyer is fully committed and the transaction is moving toward closing.

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Step 7: Final Walk-Through

A day or two before closing, the buyer does a final walk-through of the property. This isn't another inspection — it's simply a chance to confirm that:

• The home is in the same condition as when they made the offer
• Any agreed-upon repairs have been completed
• The seller's belongings are out (or will be by the agreed date)

It's a quick but important step, and I always accompany my clients for this.

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Step 8: Signing and Funding

In the final days of escrow, both the buyer and seller sign their respective closing documents — often with a notary. Buyers will also wire their closing funds (down payment and closing costs) to the escrow account.

Once the lender funds the loan (wires the mortgage money to escrow), the escrow officer confirms that everything is in order and sends the deed to be recorded with the county.

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Step 9: Recording and Closing

When the county records the deed, the sale is officially complete. The buyer gets the keys. The seller receives their proceeds. Escrow is closed.

In Los Angeles County, recording typically happens the same day or the following business day after funding.

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How Long Does Escrow Take?

In Southern California, most escrows close in 30 to 45 days for financed purchases. Cash transactions can sometimes close in as little as one to two weeks. Shorter or longer timelines can be negotiated depending on the situation.

Delays are common — they're caused by lender conditions, missing documents, title issues, or repair negotiations. Having an experienced agent in your corner helps keep things moving and ensures small hiccups don't become deal-breakers.

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You Don't Have to Navigate This Alone

Escrow can feel overwhelming, especially the first time — or the fifth time. Every transaction is different, and having someone who knows the process, the paperwork, and how to advocate for you makes an enormous difference.

Whether you're buying your first home in Montebello, selling a property in the San Gabriel Valley, or navigating a more complex situation like a probate or short sale, I'm here to walk you through every step with clarity and care.

📍 Learn more at homenest.house 📞 Or call me directly at 323-472-7059

— Suzanna Saharyan, Realtor | CENTURY 21 Realty Masters | Serving LA County, Orange County, Riverside, San Bernardino & Ventura County