Escrow services help protect both parties in a transaction, but they can’t control all outside factors. In some cases, deals may fall through because of issues on the buyer’s end. This often happens to first-time buyers who are still learning the process and unknowingly commit escrow mistakes. As a buyer, it’s important to know how to have a safe escrow experience. This article discusses what not to do in escrow and how to avoid disadvantageous deals and financial issues.
1. Making big financial changes beforehand
Buying a new car or switching jobs may seem unrelated to escrow, but they impact credit score, income, or debt-to-income ratio. Major changes will require updated documents, which complicate and delay the transaction. As much as possible, make sure to maintain a stable income and credit standing while closing the deal to avoid issues with getting a loan or slowing down the process.
2. Having no financial backups
No matter where you source your funds, it’s important to have reliable backups. For example, if you’re relying on a loan, having a trusted co-signer can assist in securing its approval. You can also protect your deposit by including a financing contingency clause in the escrow agreement, in case you don’t end up getting a loan and cancel the deal.
After purchasing a home, maintaining an escrow account for your mortgage becomes essential for tax and insurance payments. Preparing strategies for when your account runs low on money can help secure the funds for required payments.
3. Lack of looking into the involved parties and properties
Several key factors must be considered when handling large transactions. Never forget to verify the credibility of the escrow agent and the seller by researching their credentials and past testimonials. Not doing this can be one of the biggest escrow mistakes a buyer makes.
It is also essential to undergo a thorough house inspection first. Inspect any hazards, damages, and violations of required standards before the deal is finalized to save a lot of time and legal fees.
What to look out for in a home inspection
- Health Hazards: Molding, pest infestations, lead-based paint
- Foundation issues: Cracks in the ceiling or walls, uneven floors
- Plumbing: Water damage, leaky pipes, poor drainage
- Electricity: Exposed wires, overloaded electrical panels
4. Skimming through documents
One of the most crucial escrow mistakes buyers can make is not properly reading through the documents they are signing. While escrow agents will assist in communicating the information and guiding you through the deal, it’s never too safe to check everything on your end. These lengthy documents may contain undisclosed information, conditions, hidden fees, or other mistakes that might be unfavorable on your end. Pointing these out and correcting them before signing makes for a smooth and safe escrow process.
5. Failing to meet agreements and other escrow mistakes
Even missing one signature deadline or submitting a document a day late can delay closing. Going back to the previous escrow mistakes, it’s important to note down details in the contract, such as deadlines, arrangements, and penalties. Filing for the needed documents as early as possible and creating an organized schedule with Google Calendar, Trello, or Tweek helps you keep track of these requirements and stay on top of the deal.
The Key to Escrow
Proper and safe escrow agreements are built on communication, transparency, and diligence on all parties. Committing escrow mistakes, no matter how ‘small’ it may seem, like missing a deadline, makes a big impact on the transaction and the relationship between parties. New to the service or not, there are many things buyers can do to have a safe escrow experience and secure a beneficial deal.
Key Takeaways
- Being a responsible buyer brings a safer escrow experience. Make sure your finances are in order, conduct thorough research, and follow the deadlines and agreements.
- It’s essential to review all the documents before signing to note down important details and catch errors.
- Escrow works best when all parties are diligent, transparent, and committed to following through on responsibilities.
Sources
19 Title and escrow problems and how to solve them. (n.d.). End Point. https://www.endpoint.com/post/19-title-and-escrow-problems.
Araj, V. (2024, October 16). A buyer’s home inspection checklist. Rocket Mortgage. https://www.rocketmortgage.com/learn/home-inspection-checklist.
Avoid Costly Escrow Mistakes. (2025, March 21). Citrus Heritage Escrow. https://www.citrusheritageescrow.com/avoid-costly-escrow-mistakes/.
Fontinelle, A. (2025, May 26). 10 Hurdles to Closing on a New Home. Investopedia. https://www.investopedia.com/articles/mortgages-real-estate/09/10-problems-prevent-closing.asp?utm.
Liberto, D. (2025, April 28). 8 Conditions You Must Have in Your Real Estate Contract. Investopedia. https://www.investopedia.com/financial-edge/0810/7-must-have-real-estate-contract-conditions.aspx.
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