Understanding Escrow: New House Seller Tips


There are a  number of terms you need to familiarize yourself with in the world of real estate. One of these is “escrow”. It is an important term that deals with sellers that helps a lot in selling a house.

In this article, we will break down what it means and how to help new sellers in their sale of the house or any property.

What is Escrow?

It is a neutral third party that holds the funds while buyers or sellers are in the process of negotiating and transacting. It is primarily a protection for both parties when purchasing a house. 

An escrow will guarantee the seller that the buyer has the ability and the funds to pay for the house and that it will be paid once the title is transferred to the buyer. If there is a high-stakes negotiation, an escrow will ensure the trust and confidence between the parties.

Escrow Agents

Agents arrange the escrow. These are persons who are not in any way affiliated with any of the parties involved. They are entrusted with the payment and will hold on to the funds until certain set conditions have been met like final transfer of the title. They are also referred to as title agents because of that condition.

Buyers and sellers can select their own escrow agent. These can come from recommendations or popular escrow agents in the area. During the entire process, the escrow will not allow any of the amount deposited to be withdrawn by the buyer nor the seller.

A serious buyer will usually have an escrow and will assign an earnest amount which will “reserve” the property for them. It is also an assurance and protection for the seller when dealing and negotiating with the buyer. When both parties come to an agreement, the earnest amount will usually be used and added to the down payment.

Take note that an escrow may take about 1% to 3% of the total sale price as service fee. In the event that the negotiation doesn’t push through, the full amount will be given back to the buyer.

Escrow Account

An escrow account is an account managed by a particular lender which is used to collect advance insurance payments and tax payments from the homeowner. The lender will add up the amount of the payments per year and divide it monthly. They will also add an extra amount for each mortgage payment.

Tips for New Sellers

An escrow is an important part of the process of buying and selling a house. Here are some things to keep in mind.

  • Read all the related documents and paperwork regarding the escrow. This will ensure that you know everything about their service.
  • Be responsive. This way the process will move quickly and clearly.
  • Give the closing documents a thorough read and make sure you understand all the terms and agreements.
  • Keep all your escrow-related documents for legal, administrative, and tax purposes.


An escrow is an important part of the sale of a house because it helps give peace of mind to the seller and the buyer. Make sure that you get a reliable and trustworthy escrow agent to make the process as smooth as possible.
For more information, you can ask our home buyers at SnapCashOffers.com for more information on how to sell your house

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