Escrow is one of the most misunderstood parts of the real estate transaction, but it plays a critical role in protecting both buyers and sellers.
In a typical home purchase, an escrow account is opened by a neutral third party (like a title company or attorney). This account holds important funds — such as earnest money deposits — and legal documents until all terms of the sale are met.
Why it matters:
- ✅ Ensures no money changes hands until the deal is complete
- ✅ Protects both parties during negotiations, inspections, and title checks
- ✅ Allows safe disbursement of payments and documents at closing
Some homeowners also have escrow accounts with their mortgage servicer, used to collect monthly property taxes and insurance premiums.
Understanding escrow gives you more control and peace of mind in every step of the buying or selling process.
