When you accept a buyer’s offer, your real estate transaction enters escrow—the period between contract and closing. During escrow, a neutral stakeholder holds the buyer’s cash and the seller’s deed while the buyer and seller fulfill the conditions of the contract. When the contract contingencies are satisfied, the mortgage is in place, and the title is certified, the escrow agent will date the deed, send the purchase money to the seller, and close the sale. This usually takes around 30 to 40 days.
While most escrows are trouble-free, around one in five will experience setbacks. Here’s how to ensure yours stays on track and your home sale closes.
1. Eliminate Repair Surprises
Most home sale contracts contain a home inspection contingency that gives the buyer 10-15 days to have the home inspected. Depending on the terms of the contract, if the buyers are not satisfied with the inspection results, they can cancel the contract or try to negotiate a discounted selling price. Taking the preemptive action to get a seller’s pre-inspection means that you can fix the problems upfront that could delay the escrow closing later.
2. Screen the Buyer
While there are unpreventable circumstances—such as a sudden job loss—that could delay or stop a buyer’s financing, most issues can be prevented by thoroughly screening the buyer. Ask your agent to call the buyer’s mortgage provider directly to verify their preapproval documents and confirm that the lender has reviewed the buyer’s credit reports. The buyer should be able to prove that they have the necessary funds for the down payment so they don’t come up short at closing.
3. Review the Title
Title problems are very unusual with newer homes. Problems typically occur with homes that have been in the family for several generations. If you are selling such a home, it’s worth hiring a title company to review the title. Title problems can take many months to resolve, often requiring a fresh deed or even a court order to correct. If you leave the title problems until escrow, there is a chance that you could lose your sale.
4. Double-Check Every Document
Document problems, such as misspelled names or an incorrect loan amount, can cause serious delays, as the documents have to be redrafted, reprinted, and re-signed. Ask to see every piece of paperwork as far in advance as you can. Pay particular attention to numbers, prices, down payment amounts, and personal information.
5. Move Out Carefully
Right before closing, the buyer will conduct a final walk-through to make sure the home is in a reasonable condition. Leaving piles of trash in the kitchen or gouging a hole in the wall as you remove the furniture is a surefire way of extending escrow, as the buyer will expect these problems to be fixed before closing.
Don’t wait until the last minute to sort out any issues. Get them resolved beforehand so you can be on your way to a stress-free, straight-sailing escrow.