Escrow
When money or documents are held by a neutral third party until conditions are met. In real estate, earnest money sits in escrow, and in some states the whole closing process is called escrow.
Your Room opens on this part of the sale, with the offer and everything before it already ticked.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.
See how it worksWhere this comes up in a sale, and what follows
- Review offers and negotiate (comes before)
Part 1 of 4
Why a seller cares
A neutral third party holds the money and the paperwork until both sides have done what they promised. It is why the buyer's deposit does not sit in anyone's personal account, and why closing money moves the way it does.
Part 2 of 4
A simple example
The buyer's $6,000 earnest money goes to the title company's escrow account. At closing the same account receives the buyer's loan funds and pays your mortgage off before the rest comes to you.
| What goes into escrow | What comes out, and when |
|---|---|
| The buyer's $6,000 deposit | Credited to the buyer at closing, or refunded, or forfeited, per the contract |
| The buyer's loan funds | Your mortgage payoff, the fees, then your proceeds, all on closing day |
| Your signed deed | Recorded once the money is in, never before |
Escrow is the reason nobody hands anybody money directly. Everything meets in the middle and leaves together.
Part 3 of 4
What people get wrong
That escrow is a company. It is an arrangement; the title company, an escrow company or an attorney holds things in escrow.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines escrow in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.