The homebuying process is filled with many detailed steps—all crucial to getting to closing day. When the buyer extends an offer, and the seller accepts that offer, the buyer puts earnest money into escrow, a mutually agreed upon percentage of the total home cost. The earned money serves as a good faith sign that the buyers will move forward through the process and buy the home. For more insight into the escrow process, read what it means for buyers and sellers.
What every buyer needs to know about the escrow period
After the seller accepts the offer, the buyer’s earnest money will be placed in escrow, lasting 30 to 60 days. During this time, the buyer needs to schedule an inspection, the lender will order an appraisal of the property, and there will be a final walk-through within 24 hours of the closing day. During the escrow period, buyers must be aware of spending habits. This means not opening any other lines of credit, not making large purchases, and not making any employment changes.
Once the inspection and appraisal are complete, additional vital things for buyers to do during this period are:
- Take measurements of the house. You can either take these during the inspection or negotiate to come to the house on a different day
- Set up utilities
- Set up insurance
- Schedule movers
- Schule cleaners
What every seller needs to know about the escrow period
Once the offer is accepted, home sellers may want to focus on packing and moving out. However, with the inspection and appraisal still ahead, sellers must continue to focus on the current property. During the escrow period, sellers should ensure everything works correctly and in good condition. If any known home issues need to be resolved, sellers should address these before the inspection.
If the inspection report has issues, sellers must be prepared to make improvements, provide credits, or negotiate with the buyers. For the appraisal, the home should be in showing-ready condition to help ensure the home appraises for the value of the accepted offer.
Twenty-four hours before closing, the buyers and their real estate agent will come to conduct a final walk-through. The home should be in the same condition as when the offer was made; otherwise, the seller risks the buyer withdrawing the offer.
In many home sales, the sellers will be obligated to provide certain documents, such as mandatory disclosures, deeds to the house, insurance records and more.
As a courtesy to the buyers, the sellers may decide to provide any other home manuals and guides, such as directions on specific home systems, the paint colors used and insight into landscaping care.
