Real Estate 30 Day Escrow Timeline In Arizona

What is Escrow?

An escrow is a financial arrangement in which a third party holds and regulates the payment of funds required for two parties involved in a real estate transaction. In a real estate transaction, an escrow period is typically 30 days, during which time all necessary documents and funds are collected and held by the escrow agent until the transaction is complete.

Escrow Timeline

Here is a timeline of critical dates and events that typically take place during a 30-day escrow period:

1. Opening of escrow: This is the first step in the escrow process and occurs when the buyer and seller agree to the terms of the sale and the escrow agent is selected. The escrow agent will provide both parties with a copy of the escrow instructions, which outline the steps that need to be taken in order to complete the transaction.
   
2. Earnest Deposit / Deposit of Funds: The buyer will typically be required to deposit a down payment or earnest money into the escrow account.  In Arizona, the exact amount will be spelled out in the purchase contract and this deposit is typically around 1-5% of the purchase price. It serves as a good faith gesture that the buyer is committed to completing the transaction.
3. Ordering of inspections: The buyer will have a set number of days, usually around 10-14, to complete any inspections they wish to have done on the property. This may include a home inspection, termite inspection, or other specialized inspections.  The inspection period will be defined in the purchase contract. In Arizona, home inspections run approximately $400-700 depending on size, age and location of property.  Termite inspections run about $50-200.  In the Phoenix / Scottsdale area there are inspections companies that can do both.  In the Sedona / Verde Valley the home inspector is separate from the termite inspector.  Inspector schedules vary so it’s important to schedule the inspections early in the inspection period to allow ample time to review inspection reports.
   
4. Review of inspection reports: Once the inspections are complete, the buyer will review the inspection reports and may request that the seller make any necessary repairs or credits through the Buyer Inspection Notice Seller Response (BINSR) and applicable addendum. The seller may choose to agree to these requests or negotiate with the buyer. 
   
5. Approval of loan: If the buyer is obtaining a mortgage to purchase the property, they will need to provide the lender with all necessary documentation and go through the loan approval process. This may include an appraisal of the property to ensure that it is worth the purchase price.  Appraisals are approximately $400-1000 depending on size, location, and age of home.  It is important for a buyer to be on top of any documentation their lender is requiring so it does not impact critical timelines for close.  Once the lender has reviewed and approved the loan, they will issue a clear to close, which means that all conditions of the loan have been satisfied and the closing can proceed. The lender will also provide the buyer with a closing disclosure (CD), which outlines the final terms of the loan and any closing costs that the buyer will be responsible for.  It must be provided to the borrower at least three business days before the closing date, according to the Consumer Financial Protection Bureau's TILA-RESPA Integrated Disclosure (TRID) Rule.The lender is responsible for preparing the CD and sending it to the borrower. The lender should provide the CD to the borrower as soon as it is available, but no later than the three-business-day requirement. If the CD is not received in time, the closing may need to be delayed. Once the borrower has received the CD, they should review it carefully to ensure that all of the fees and terms are accurate and that they understand what they are agreeing to. If the borrower has any questions or concerns, they should bring them up with the lender or their real estate agent as soon as possible.  It's important to note that the CD is just one of several documents that the borrower will need to review and sign during the closing process. Other documents may include the mortgage agreement, the deed, and any other necessary legal documents. It's important to carefully review all of these documents before signing them to ensure that you understand the terms and conditions of the transaction.
   
6. Review of title: The escrow agent will review the title to the property to ensure that it is clear and that the seller has the right to sell the property. Any issues with the title will need to be resolved before the transaction can be completed.
   
7. Signing of documents: Both the buyer and seller will need to sign a variety of documents, including the purchase agreement, loan documents (if applicable), and any documents related to repairs or credits negotiated during the escrow process.
   
8. Closing of escrow: Once all necessary documents have been signed and all funds have been deposited, the escrow agent will close the escrow and disburse the funds according to the instructions provided by the buyer and seller. The buyer will receive the keys to the property and the seller will receive the proceeds from the sale.
   

It is important for both the buyer and seller to be proactive during the escrow process and to communicate with the escrow agent to ensure that everything is moving smoothly. Any delays or issues that arise can impact the closing date and may require an extension of the escrow period.