What Is Escrow and How Does It Work?

"What is escrow" is a question I get from almost every first-time buyer at some point, usually right after their offer gets accepted.
Darya Ghomeshi, a Compass agent in Sacramento and El Dorado Hills, breaks down what escrow actually is and why it exists.

Escrow, in Plain Language

Escrow is a neutral third party that holds funds and documents during a real estate transaction until every condition of the sale has been met. Neither the buyer nor the seller has direct access to the money or the property during this period, the escrow company holds everything until both sides have fulfilled their obligations. I think of it as a safety net that protects everyone involved.

What Happens Once Escrow Opens

Once an offer is accepted, I open escrow right away, and here's generally what happens next:

• Earnest money deposit: The buyer's good faith deposit goes into the escrow account
• Title search: Escrow and title work together to confirm the property can be legally transferred
• Contingency periods: Inspection, appraisal, and loan approval all happen during this window
• Document collection: Escrow gathers signatures, disclosures, and loan documents from both sides
• Final walkthrough and closing: Once everything clears, funds and documents transfer and the sale records

How Long Escrow Typically Takes

In my experience, escrow typically runs 21 to 30 days for a financed purchase, and can close faster for cash transactions. I stay in regular contact with the escrow officer throughout to keep things moving and flag any issues early.

Who Chooses the Escrow Company

In California, this is often negotiated as part of the offer. I usually work with a small group of escrow companies I trust based on years of transactions together, because responsiveness during escrow makes a real difference in how smooth the process feels for my clients.

What Can Delay Escrow

Financing delays, appraisal issues, or title complications can all push a closing date back. I try to get ahead of these by making sure my clients are pre-approved with strong documentation before we even write an offer, which removes one of the most common sources of delay. I also open escrow ahead of time on a listing to make sure we take care of any title complications ahead of time. 

Frequently Asked Questions

What does it mean when a house is "in escrow"? It means an offer has been accepted and the transaction is actively moving through the process, with a neutral third party holding funds and documents until closing.

Who pays for escrow fees? Escrow fees are often split between the buyer and seller, though this can be negotiated as part of the offer.

Can I access my earnest money once it's in escrow? Generally no, not without an agreement from both parties or a contingency that allows you to cancel and reclaim it under specific circumstances outlined in the contract.

How do I know if my escrow is on track? I keep my clients updated at every milestone so nothing feels like a mystery. Reach out through darya916.com if you have questions about a transaction in progress.

Darya Ghomeshi | CA DRE# 01935449 | Compass California II, Inc. | CA DRE# 01527235. This content is educational and not a substitute for advice from a licensed escrow or title professional.