Navigating the Escrow Process: A Step-by-Step Guide for Homebuyers by Genesis Buduan

Congratulations on finding the perfect home! Now that you're in escrow, it's important to understand the process and what to expect. Here's a step-by-step guide to help you navigate this exciting time.

Step 1: Review and sign the purchase contract

The escrow process officially commences when the buyer and seller have reached an agreement on the terms of the purchase contract and sign the document. This document, known as the Purchase Contract in the State of Hawaii, is 14 pages long and it is crucial to consult with your Realtor to fully understand the details and to stay on schedule.

Step 2: Perform due diligence

During the escrow process, the buyer is allotted a specific period to conduct various inspections and investigations of the property such as home and pest inspections, and any other due diligence the buyer wishes to perform. It is important to remember that this period also allows the buyer to negotiate the price of the home, repairs, and credits. In the event that an agreement cannot be reached between both parties, the buyer has the legal right to terminate the contract and retrieve any deposited funds held in escrow, excluding any non-refundable payments made for inspections or appraisals.

Step 3: Review and approve title report

The escrow company will order a title report, which will reveal any liens or encumbrances on the property. The buyer will review and approve the title report.

Step 4: Obtain financing

Obtaining financing for the purchase is a crucial step during the escrow process for buyers who are obtaining a loan. This entails working with the lender to submit all necessary documentation and going through the underwriting process.

Quick tip: Avoid making any large purchases or changes to your credit during the escrow process, as it can affect your loan approval and delay the closing process. Read our other blog on our tips and advice of what NOT to do after you’ve gotten your offer accepted on your dream home!

Step 5: Review and approve disclosures

The seller is required to provide certain disclosures to the buyer, such as information about the property's condition and any known defects. The buyer will review and approve these disclosures. As a seller, it is important to provide accurate and honest disclosures about the property's condition and any known defects to the buyer. The buyer will review and approve these disclosures before proceeding with the sale. It is important to disclose all material facts with good faith.

Quick tip: Failure to consciously undisclose important information can lead to legal issues and potential lawsuits after the sale, so it's essential to be transparent and honest in your disclosures. And yes, this includes even minor leaks that you know about.

Step 6: Close escrow

Once all the above steps have been completed and any contingencies have been met, the escrow company will coordinate the signing of all necessary documents and the transfer of funds. The keys to the property will then be released to the buyer, and the sale is complete. Congratulations on completing the escrow process and becoming a homeowner! It's important to note that using a realtor with experience and positive reviews can make the process smoother and less stressful. Contact us today if you need help finding your dream home with an experienced and highly rated realtor.