So your offer has been accepted or you’re looking to get a feel for the escrow process. This guide will serve as a home base to follow along on the process and answer some of your questions. You can always ask the reframe team for any help along the way!
What is escrow? The escrow process is the period of time from when your offer is accepted to when we close on your home. When we refer to “escrow” we’re usually talking about the company that is managing the escrow process or as the process “escrow” itself. “That’s a good question for escrow.” or “Congrats! We’ve opened escrow!”
Escrow starts from day 0 — the day that your offer is accepted. Each day after starts the count from 0, 1, 2 …
The seller’s escrow company will reach out to our team for your information, we’ll share it, and they will reach out to you directly to tell you where to wire your earnest money deposit (the 3% good faith deposit). Make sure to do this ASAP to avoid any delays.
Escrow is part of your closing costs. You’re paying them to help manage the sale, so you can utilize them as a resource, too.
Whether you have an investigation contingency or request for repairs, we always recommend having an inspection. An inspector will tell you the major (if any) and minor issues with the property. They may also tell you how to upkeep your property in the future. Inspections usually take anywhere from 90 minutes for a small condo to 3 hours for a 3,000 Sq. Ft. home with a pool. We recommend having your inspection as soon as possible. We also recommend bringing a tape measure to the inspection so you can start furniture planning. This is a perfect time for you to take measurements and study the layout. We typically schedule the inspection the day of or day after getting your offer accepted.
These are general inspectors. If there is anything in particular you would like to check on the home, we will need a specialist. I recommend scheduling these right at the beginning of escrow.
Make sure to connect with escrow before wiring your funds. Be aware of wire fraud. ALWAYS call escrow before sending a deposit.
Escrow will send you a group of documents within a few days of opening escrow. Heads up — escrow does NOT send these documents to your agent. We don’t see these unless you send them to us, so often, if you have escrow document questions, we recommend asking the escrow company. The most common question I hear is about how to take title. Here are a few resources I found online that help you determine how you would like to hold title of your home.
In every sale of residential property in California, there are disclosures and advisories that are required to be sent to buyers and sellers as part of the sale. You even signed some of these when we sent the Offer Agreement.
Now that you’ve opened escrow, there’s more! There are the California specific ones — you can tell it’s them because they look just like the offer agreement you signed. There are also brokerage specific advisories. Reframe sends out specific disclosures and advisories to every sale done via a reframe agent. Most of these docs came about because of an incident at some point in time. Every brokerage has them. My transaction coordinator will send all of these to you via DocUSign so you don’t need to sign it by hand.
There are also Seller Disclosures. These are important to read through. These disclosures are directly from the seller. It’s everything that can remember about the home that you should know. There’s the Seller Property Questionnaire and the Transfer Disclosure Statement. These are the 2 disclosures that are part of your investigation contingency.
IF the home you are buying is in an HOA. HOA docs are a set of CC&Rs that will be sent to you directly from escrow. You have an HOA contingency separate from the investigation contingency. Read through these documents to make sure the HOA fits what you’re looking for. You have 5 days from the time that you receive HOA docs to remove the contingency.
Natural Hazard Report — Escrow will order a natural hazard report. Read through this to ensure you are aware of any natural hazard zones the property may be in.
Title Report — Escrow will order a preliminary title report through a title company. Title is used to make sure you buy your property free and clear without any liens and get a clean title when the property is transferred in your name. When you receive this document, please read through the report and keep an eye out for zoning codes and any easements if applicable.
The inspection can be time consuming. We would love to see you there the whole time, but usually, most buyers come for the last hour. They take measurements and photos. At the end of the inspection, the inspector will do a verbal overview of what they found. Everything mentioned will be on the report, but we do recommend being there to hear it so you can ask questions.
Most commonly, outlets are substandard. They need to be upgraded to GFCI’s. Sometimes buyers might not understand what that means when they read it on the report, or what the usual cost is. The GFCI plate is $15 and the replacement can be $100–150 of labor. It’s a small fix that almost all homes need.
Most buyers since 2020 have not had the opportunity to request repairs or repair credit from the seller. It’s a seller’s market and sellers typically have an easy time countering that out in the negotiation process. It’s also a way that buyers make themselves stand out in their offer. We see a request for repair in about 1 of every 12 or 13 buyers.
If you are the lucky buyer that does get a request for repair, here are your next steps after receiving the investigation report.
If you don’t have a RR, after the investigation report(s), you can decide if you are ready to remove the physical inspection contingency.
If you do have a RR, once we hear back from the seller on the status, you can decide if you want to accept their response or counter back again. Usually sellers will offer a credit instead of fixing the items wrong with the home. This is very typical.
Seller Disclosures are part of your overall investigation contingency. So, if you have not received them, we can also just remove the physical investigation.
You have 5 days from the time that you receive seller disclosures to remove the contingency. It is ideal to be on the contingency timeline you agreed upon.
If you have an appraisal contingency, we need to wait until we get the appraisal report back from the Appraiser.
If the appraisal comes in higher than your purchase price, we don’t say anything.
If the appraisal comes in at the purchase price — we’re good to go! We can remove the appraisal contingency.
If the appraisal comes in below the purchase price and we have the appraisal contingency, we can renegotiate. Heads up — in these situations, sellers typically don’t want to do a request for repair because they’re always feeling that they’ve given you a discount on the home. But we can always do our best to negotiate! Sometimes a seller will ask you to cover at least some of the gap, other times they won’t. A seller can also choose not to lower the price, leaving buyers to decide if they want to cover the gap or back out of escrow.
We’re relying on the lender to give you the green light to remove the loan contingency. Getting all your docs in ASAP is important to make sure we can remove the loan contingency on time.
Loan contingency is typically the last one removed.
Within 5 days of closing escrow, buyers have the option to do one final walk through to make sure everything is looking good. This is typically for buyers who had a request for repair and want to make sure that the seller’s work was correct before closing escrow. If the home is vacant, you don’t need to do a final walk through, but it is a nice experience for our buyers who have been patiently waiting for their new home!
If there is something wrong, we can take it to the listing agent to talk with the seller. This is unusual, but it does happen! One time the seller took the appliances even though we included them in the contract!
You’ve got questions and I can’t wait to answer them.