You've Opened Escrow, Now What?
Panic? Well, maybe a little. Besides doing that, follow these
suggestions (and your realtor's advice) and you'll soon be the proud
owner of a new home.
After you've signed on the dotted line, you'll be asked to provide a
check for the "earnest money", showing that you are a serious buyer.
In Southern California, the standard of practice is that a deposit
in the amount of 3% of the purchase price is deposited into escrow.
This deposit check may also be held by an attorney or in the
broker's trust account. Make sure that there are sufficient funds in
your account to cover this check.
The deposit check will be cashed. Assuming the sale goes through,
this money will be applied to the purchase price of the home. If for
any reason the sale is not consummated, you may be entitled to
receive all of your deposit back, less standard cancellation fees.
In certain instances, the seller may be able to retain this money as
liquidated damages. Prior to executing a purchase contract, it would
be wise to speak with your counsel regarding whether or not it is
your best interest to have a liquidated damages clause as part of
The period that you are "in escrow" is often 30 days, but may be
longer or shorter. During this time, each item specified in the
contract must be completed satisfactorily. By the time you have
opened escrow, you have come to an agreement with the seller on the
closing date and the contingencies. Each contract is different, but
most include the following:
1. Inspection contingency. This should be completed as soon as
possible after the contract to purchase is signed, as
unsatisfactory results of the inspection may mean that you will want
to cancel the contract .
2. Financing contingency.
Once the contract is signed, you have a period of time to secure
funding. If, for any reason, you are unable to secure funding during the period of time
granted to you by the contract (and the seller will not provide a written extension of time), you must decide
whether you want to remove the contingency and take your chances on getting a loan. You may choose to cancel the
purchase contract .
3. A requirement that the
seller must provide marketable title.
With an attorney or title officer, review the title report. The
title must be "clear" to ensure that you don't have legal issues
regarding your ownership on down the line.
Check into local and state ordinances regarding property transfer
and make sure that you and/or the seller have complied with them.
Secure homeowner's insurance. This will probably be required before
you can close the sale. It would be in your best interest to
apply for insurance as soon as possible after the contract is
Contact local utility companies to schedule to have service turned
on when you close escrow.
Schedule the final walk-through inspection. At this time, you should
make sure that the property is exactly as the contract says it
should be. What you thought to be a "permanently attached"
chandelier that would come with the property might have been removed
by the seller and replaced with a different fixture entirely.
You've made it! Once the sale has closed, you're the proud owner of
a new home. Congratulations!