For some home buyers in Washington State, the escrow process can seem like a mysterious step along the path to homeownership. This is especially true for first-time buyers who have never been through it before. Today, we will shed some light on this subject. Here’s an explanation of how the escrow process works for home buyers in Washington State.
In a real estate and home buying context, escrow is an intermediate step that occurs after the purchase offer has been accepted, and before closing. The term “escrow” can also refer to the agent or company that manages this process and holds funds prior to closing.
When home buyers make an offer to purchase a house, they usually write an earnest money check to show the seller(s) they are serious about buying. This check typically gets placed into escrow. At this stage, the money hasn’t been released to the seller yet. It is being held by a neutral third party until negotiations are finalized and both parties can close the deal.
So, the buyers and sellers have signed a purchase agreement, and the earnest money has been delivered. This is what starts the escrow process in Washington. But it doesn’t end there. There are several more steps that are important to both the buyer and seller.
Shortly after the process has been initiated, the escrow agent will start preparing documents for closing. There are a variety of documents generated during this stage, and prior to closing. They include title-related documents, tax information, property surveys (when necessary), loan payoffs, homeowners insurance, and other documents relating to the sale of the property.
A title search will likely be conducted during the escrow process. This is when the escrow company researches a variety of property records, including deeds, assessments, and related paperwork. The goal here is to clearly identify ownership of the property and to ensure that there aren’t any liens or claims against the property that might interfere with the sale.
The escrow agent or closing company will also assemble other documents that are needed to close the deal. These include documents provided by the mortgage company.
When all of this research has been completed, and when all documents have been processed, the home buyer and seller can then close the deal. In Washington State, this is referred to as closing. (It can also be referred to as “settlement,” particularly in the eastern part of the country.)
Closing is when the home buyer and seller sign all of the paperwork relating to the real estate transaction. The old mortgage loan (if there is one) will be paid off. The seller will sign over the deed. The home buyer will sign the new mortgage note, if applicable. And all other parties, including real estate agents, are paid whatever they are due.
Related: How closing works for buyers
The escrow process in Washington can vary based on the specifics of the transaction. On average, escrow periods can range from 30 to 60 days. But again, it varies.
Typically, the home buyer and seller will agree on the escrow timeframe and closing date as part of the purchase agreement/contract. The closing date is usually written into the contract. So if the closing date is proposed for 45 days away from the contract signing, that means the escrow process will be 45 days long (give or take).
As a home buyer, the most important thing you can do during the escrow process is to handle any information or document requests in a timely fashion.
During escrow, it’s not uncommon for the buyer and/or seller to have to sign revised documents, or to provide additional paperwork needed to close the deal. Handle these requests as quickly as you can, in order to keep things on schedule. And be sure to ask any questions you might have along the way, as opposed to saving them up for closing day.
Sammamish Mortgage can help. We serve clients across Washington, Idaho, Colorado, Oregon, and California. Since 1992, we’ve been offering multiple mortgage programs with flexible qualification criteria to borrowers across the Pacific Northwest, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans. Visit our website to get an instant rate quote or to use our online mortgage calculator. Or, contact us if you’re ready to get pre-approved for a mortgage.
Escrow is the period after a purchase offer is accepted and before closing, when a neutral third party holds funds and helps manage documents needed to complete the sale.
A neutral escrow agent or escrow company typically holds the earnest money until the transaction is finalized or the contract directs how the funds should be handled.
The escrow process usually begins after the buyer and seller sign the purchase agreement and the earnest money is delivered.
The escrow company coordinates the closing process, holds certain funds, prepares and gathers required documents, and helps ensure the transaction is completed according to the contract.
A title search helps confirm legal ownership of the property and checks for liens, claims, or other issues that could interfere with the sale.
Documents may include title paperwork, tax information, property survey documents when needed, loan payoff information, homeowners insurance details, and lender-provided closing documents.
Escrow often takes about 30 to 60 days, but the timeline can vary depending on the transaction and the closing date agreed to in the purchase contract.
At closing, the parties sign the final paperwork, the seller transfers the deed, any existing mortgage is paid off if applicable, the buyer signs new loan documents if financing is involved, and funds are distributed.
A home buyer should respond quickly to requests for documents, signatures, or other information, review paperwork carefully, and ask questions early to help keep the transaction on schedule.
Yes. Delays can happen if additional documents are needed, title issues arise, or either party is slow to provide required information or signatures.
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