One of the words you’ll hear thrown around whether you’re buying or selling is ‘escrow’. According to Google AI, Escrow is a neutral third-party account that holds funds or property during a transaction, releasing them only when specific conditions are met by the buyer and seller. In real estate, this process also involves an escrow agent holding the buyer's earnest money, ensuring the home sale conditions are fulfilled, and then disbursing funds to the seller and transferring the property title to the buyer upon completion. Sounds simple enough, and yet can be confusing amongst all the other aspects of a home sale. If you’re looking to sell, and want a leg up on how the escrow process works in a transaction, then thanks to BHHS California blog, you can read on below for all the details.

Selling your home in California involves more than just finding a buyer. One of the most important stages is the escrow process, which ensures a secure and smooth transaction for both parties.

If you sell in Southern California, knowing how escrow works can help you avoid delays. It will also help you meet your obligations and close successfully. This guide breaks down the process step-by-step so you know exactly what to expect.

Step 1: Opening Escrow

Once you and the buyer agree on the purchase terms and sign the purchase agreement, escrow officially opens. The buyer will put earnest money into a neutral escrow account. This amount is usually 1–3% of the purchase price.

An escrow company or attorney manages this account, ensuring funds are protected until all contractual conditions are met. We partner with Pickford Escrow, a trusted Southern California escrow provider, to give sellers a smooth and secure experience from start to finish.

Step 2: Providing Required Disclosures

California law requires sellers to disclose important information about the property, such as known defects, repairs, neighborhood issues, and any hazards like lead paint or earthquake risks. Common forms include the Transfer Disclosure Statement (TDS) and the Natural Hazard Disclosure (NHD) report. Being thorough and honest in your disclosures not only fulfills legal obligations but also helps prevent disputes later in the process.

Step 3: The Buyer’s Due Diligence and Inspections

During the escrow period, the buyer will arrange for home inspections, appraisals, and any additional reports. As the seller, you may need to grant access to inspectors and appraisers, and potentially negotiate repairs or credits if issues are found. In a competitive Southern California market, some buyers may waive certain contingencies, but it’s still important to be prepared for these steps.

Step 4: Title Search and Clearance

The escrow officer will coordinate a title search to confirm that the property has a clear title with no legal claims, unpaid taxes, or liens. If any issues are found, you will need to resolve them before closing. This could involve paying off outstanding debts or resolving disputes. Once cleared, the title company will issue title insurance to protect the buyer and lender.

Step 5: Negotiating and Resolving Contingencies

The buyer’s purchase contract will typically include contingencies—conditions that must be met for the sale to proceed. Common contingencies include financing, inspections, and appraisal results. As the seller, you may need to respond to requests for repairs, price adjustments, or extended timelines. Escrow can only move forward once all contingencies are removed in writing.

Step 6: Finalizing the Paperwork

When all conditions are met, the escrow officer prepares final documents, including the deed transfer and settlement statement. You will review and sign these documents, confirming the sale terms and the exact amount you’ll receive after fees, taxes, and loan payoffs are deducted.

Step 7: Closing and Receiving Funds

Once the buyer’s lender funds the loan and the county records the new deed, the property officially changes ownership. The escrow company will then disburse the net proceeds to you, usually via wire transfer or check. At this point, escrow is officially closed, and the sale is complete.

Tips for a Smooth Escrow as a Seller

Work with an experienced real estate agent who understands California escrow laws, aka myself :) Connect with me here.
Provide complete and accurate disclosures early in the process.
Be responsive to escrow and title requests to avoid delays.
Stay organized with all documents and keep communication open with all parties.

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