Escrow is a catchall term for the independent third-party that handles real estate transactions. They do other things as well but we’re talking about buying and selling houses here. Escrow is what allows people to exchange property without having to hand over a bag full of cash.
In Northern California escrow officers handle all of the paperwork and the money. Often they cannot do anything without a mutual agreement between a buyer and a seller. They are not in favor of one or the other.
So if you are buying a home, you’ll need to put in your initial deposit which is usually 3% of the purchase price. That money goes into escrow and is counted towards your final cost to close.
Escrow also sets up all of the documents to sign, coordinates with the lender and makes sure the county knows that the property has changed hands.
So you may be wondering who pays for all of this… well it depends on where you are. In Northern California typically the buyer pays. And it’s about $1000 to $2000.