Closing & Escrow

Closing Made Simple: From Escrow to Ownership, Step by Step

What is Closing/Escrow in Real Estate?

Closing (or settlement) is the final step in a real estate transaction where property ownership officially transfers from the seller to the buyer. This process involves signing all necessary legal documents, paying closing costs, and recording the deed.

Escrow refers to the process in which a neutral third party (an escrow company, title company, or attorney) holds funds and important documents until all conditions of the sale are met. This ensures the buyer and seller fulfill their obligations before finalizing the transaction.

Key Steps in the Closing/Escrow Process:

1. Opening Escrow – A neutral party holds the buyer’s earnest money deposit and documents.

2. Title Search & Title Insurance – A title company ensures the property has no legal claims or liens that could affect ownership.

3. Inspections & Appraisal – The buyer typically conducts a home inspection, and the lender requires an appraisal.

4. Loan Approval – The lender finalizes the mortgage, if applicable.

5. Final Walkthrough – The buyer ensures the property is in the agreed-upon condition before closing.

6. Signing & Funds Transfer – Both parties sign all legal documents and transfer funds through escrow.

7. Recording the Deed – The deed is officially recorded with the local government, making the buyer the new owner.

Once escrow closes, the buyer receives the keys, and the transaction is complete. Escrow ensures a smooth, secure closing by protecting both parties until all conditions are met.