Buying a home in Los Angeles is an exciting journey, but once your offer is accepted, the real work begins. The escrow process is one of the most critical phases in securing your new home, ensuring all financial, legal, and contractual obligations are met before you officially receive the keys. Understanding what to expect during this stage can help you navigate it with confidence.
Opening Escrow and Making Your Initial Deposit
Once the seller accepts your offer, escrow is opened, and the first step is to submit your initial deposit. In Los Angeles, the standard initial deposit is typically 3% of the purchase price, although this can vary in special cases like probate sales, where it may be as high as 10%. This deposit is usually wired directly to the escrow account, but it’s crucial to verify all wiring instructions directly with the escrow company to prevent fraud.
Key points to remember:
- Wire fraud is a real risk—always verify escrow details before transferring funds.
- Deposits must be submitted within three business days to avoid contract cancellation.
- The 3% deposit standard is based on California Civil Code Section 1675.
Inspections and Due Diligence
With escrow open, the next priority is conducting property inspections. A general inspector will assess the home’s condition, checking everything from outlets to the roof. However, some properties require additional specialized inspections, such as:
- Termite and pest inspection
- Sewer line inspection
- Foundation and structural review
- Mold, HVAC, asbestos, and chimney evaluations
Buyers should approach the inspection report with perspective—it will highlight flaws, but not the reasons you fell in love with the home. If necessary, buyers can request repairs, credits, or price reductions based on the findings. Sellers, however, are not obligated to make repairs, though they must disclose any known material defects.
Financing and Appraisals
If you’re financing your home purchase, expect a significant amount of paperwork. The lender will underwrite both the borrower and the property. During this period, an appraisal will determine whether the home’s value matches the agreed purchase price. If the home appraises lower than the contract price, options include:
- Negotiating a price reduction
- Increasing your down payment to cover the difference
- Canceling the contract (if you have an appraisal contingency)
Simultaneously, buyers should begin securing homeowners insurance, which has become increasingly difficult to obtain in California.
Reviewing Disclosures and Title Reports
In California, real estate transactions are highly regulated, and sellers must provide a range of disclosures. Buyers should carefully review:
- Statutory disclosures detailing known property conditions
- Preliminary title reports ensuring clear ownership and property access
A title report is crucial because it guarantees the buyer is purchasing a home with a clear and insurable title. Overlooking this step can lead to unexpected legal complications, such as issues with property access or undisclosed liens.
Final Steps: Loan Approval and Closing Escrow
Once inspections are complete, the lender will finalize the loan approval, and it’s time for the final steps:
- Buyers wire their remaining down payment to escrow.
- The lender sends funds to escrow.
- The escrow officer records the grant deed with the county.
- Once recorded, ownership officially transfers to the buyer.
Additionally, in Los Angeles, it is customary for the seller to pay for a one-year home warranty, covering major home systems like plumbing and appliances.
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Key Takeaways:
- Escrow begins once the offer is accepted, and the initial deposit (typically 3%) must be wired securely.
- Inspections help identify potential issues, but buyers should keep perspective when reviewing reports.
- Financing involves appraisals and extensive paperwork, and buyers should secure homeowners insurance early.
- Disclosures and title reports must be reviewed carefully to ensure a clear and legal transfer of property.
- Closing escrow means transferring funds, signing final documents, and receiving the keys.
I am Matias Baker Masucci, your trusted Los Angeles realtor. Thank you for reading, and I look forward to helping you with all your real estate needs in Beverly Hills.
