Once an agreement has been made with a seller and the seller's agent on the terms of the sale, an escrow will be opened.

Escrow is a legal vehicle to ensure that the title is transferred properly and funds dispersed according to the terms agreed upon by the buyer and seller.  In California, custom dictates that the seller and buyer split the escrow fees.  In some areas, however, it is the buyer's or seller's sole responsibility.  Regardless of who pays, the escrow officer does not represent either the buyer or the seller.  He or she is a neutral third party who performs functions for both parties; acting on behalf of neither.

The escrow officer will search public records for pertinent information about the property in order to ensure that the buyer will receive clear title to the property.  He or she can estimate net proceeds from the sale, will contact lenders on outstanding loans not being assumed by the buyer and will direct the disbursement of funds both to lenders and to the seller.

In recent years, the escrow process has become more complex, with new laws and tighter regulations.  The real estate agent, escrow officer, and lender work together to make sure all documents are prepared and signed, all reports filed, and all disclosures made.  Escrow will close when all conditions of the real estate agreement have been met, the deed is recorded, all documents are signed and all funds are disbursed.