If you’re new to home buying, you’ve probably heard the term "in escrow," but may not be sure what that means. Basically, once you open escrow, an independent third party holds the purchase deposit, while the buyer has the home inspected and arranges the final mortgage details.
You and the other party in the sale should both agree on which escrow company to use. Actual dealings with the company can be handled by the buyer and seller, or by your real estate agent. The company you choose will hold the buyer’s deposit (about 3 percent of the final price). The escrow company will also show you a list of instructions it expects to follow in regard to the sale. The list will cover how the deposited funds are distributed when the sale closes. Read this carefully, to ensure it matches your understanding. Sign the escrow agreement if it meets your expectations, and return the document to the escrow company.
Once the escrow holder has the deposit and signed instructions from buyer and seller, the process has begun, and the property is officially "in escrow."