Escrow is the period between an accepted offer and a closed sale, and it is where most deals get renegotiated or fall apart. A neutral third party holds the funds and documents while the buyer completes inspections, the lender orders an appraisal, and both sides satisfy the conditions in the contract.
What escrow actually does
The escrow or closing agent is neutral. They hold the earnest money, order the title search and preliminary report, coordinate with the lender, prepare and collect the signed documents, calculate the final figures for both sides, and record the deed with the county. They work for the transaction, not for you or the buyer. Your agent is the one representing your interests during this period.
The buyer inspection period
The buyer will hire inspectors to examine the property, and in Los Angeles that often includes a general inspection plus specialists for sewer line, roof, chimney, or foundation. Expect a report that lists everything, including items that are cosmetic or age-appropriate. The report itself is not a demand. What matters is the request the buyer makes after reading it.
The appraisal
If the buyer is financing, the lender orders an appraisal to confirm the home supports the loan amount. If the appraisal comes in at or above the contract price, the loan moves forward. If it comes in low, you have options: hold firm and ask the buyer to cover the gap in cash, meet in the middle on price, or provide the appraiser with comparable sales that were missed and request reconsideration. Pricing the home correctly at the start is the best protection against this problem.
Contingencies and how they end
A contingency is a condition that must be met before the buyer is committed. The common ones cover inspection, appraisal, and loan approval. Each runs on a deadline. When the buyer removes a contingency, they give up the right to walk for that reason and put their deposit at risk. Tracking those deadlines is one of the most important things your agent does during escrow.
When the buyer asks for a credit or repairs
This is a second negotiation and it should be treated like one. Separate genuine material defects from a wish list. Decide whether a repair credit, a price adjustment, or doing the work yourself serves you better. Understand where the buyer actually stands: a buyer who has already spent money on inspections and appraisal and loves the house has real incentive to close. Preparing the home before listing is what keeps this conversation small.
Frequently asked questions
What happens during the escrow, inspection, and appraisal process?
A neutral escrow agent holds funds and documents while the buyer completes inspections, the lender orders an appraisal, title is examined, and both sides satisfy the contract conditions. Contingency deadlines run through this period and lead either to contingency removal or to a renegotiation.
What is a closing agent and what do they do?
The closing or escrow agent is a neutral third party who holds the earnest money, orders the title search, coordinates with the lender, prepares and collects signatures, calculates the final settlement figures, disburses funds, and records the deed. They do not represent either side.
What is a contingency in a real estate contract?
A contingency is a condition that must be satisfied for the sale to proceed. Typical contingencies cover the buyer inspection, the appraisal, and loan approval. Each has a deadline, and once removed the buyer forfeits the right to cancel for that reason without risking the deposit.
What happens if a buyer requests a renegotiation after inspection?
You can agree to the repairs, offer a credit or price reduction, offer part of what they asked, or decline. The right answer depends on whether the items are material defects or cosmetic, what the home would face from the next buyer inspection, and how committed this buyer is. Handle it as a negotiation, not an obligation.
Questions about your escrow?
Call 310-595-0915 and I will walk you through where your transaction stands.
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