Understanding Escrow in Real Estate

Escrow is a term that you're likely to encounter in any real estate transaction. But what exactly does it mean? In the context of real estate, escrow refers to a neutral third party who holds funds or documents until the conditions of a contract are met. For example, when a buyer makes an offer on a house, they might deposit earnest money into an escrow account. This money is then held in escrow until the deal closes, at which point it goes towards the buyer's down payment and closing costs. The escrow process protects all parties involved by ensuring that no funds or property will change hands until all of the terms of the agreement have been fulfilled.