Understanding Escrow and Closing Costs

When buying or selling a home, the finish line is often the most overwhelming part. Between paperwork, final approvals, and financial transactions, it's easy to feel lost—especially when terms like escrow and closing costs start flying around.

Whether you're a first-time buyer or experienced seller, here’s a clear, simple breakdown of what escrow is, what closing costs include, and how to prepare for this final stage in a real estate transaction.

🏡 What Is Escrow, Exactly?

Escrow is a neutral third-party service that holds money and documents on behalf of the buyer and seller during a real estate transaction. In Oregon, escrow is typically managed by a title and escrow company, not an attorney (as in some other states).

Escrow ensures:

• The buyer’s funds are secure until closing

• The seller’s title is verified and clear

• Both parties meet their contractual obligations before anything is finalized

Think of it as a trusted middle ground—no one gets paid or gets the keys until all the boxes are checked.

💵 What Are Closing Costs?

Closing costs are the out-of-pocket fees that buyers and sellers pay at the end of a transaction—in addition to the home’s price. These can vary depending on the price of the home, the lender, and local tax and title rates.

Here’s a breakdown of typical closing costs in Oregon:

📌 For Buyers:

• Escrow & title fees – for managing the transaction and verifying title

• Lender fees – including application, underwriting, and document prep

• Appraisal fee – usually paid upfront, but considered part of total closing

• Homeowner’s insurance & property tax reserves – typically 2–6 months prepaid

• Recording fees – for officially registering the deed

• Prepaid interest – the interest between your closing date and first mortgage payment

💰 Buyer Closing Costs in Oregon usually range from 2%–5% of the purchase price.

📌 For Sellers:

• Escrow & title fees – often split with the buyer, depending on the area

• Real estate commission – typically 5–6% of the sale price (split between agents)

• Recording & transfer fees – if applicable

• HOA transfer fees – if the property is in a homeowners’ association

• Payoff costs – any mortgage balance, liens, or judgments

💡 Sellers generally pay fewer line items—but the commission is the largest single cost.

🔑 Can You Negotiate Closing Costs?

Yes—some closing costs are negotiable.

For example:

• Buyers can request seller-paid closing costs as part of their offer

• Lenders may offer closing cost credits in exchange for a higher rate

• You can shop around for services like title insurance or home inspections

We always recommend reviewing your Loan Estimate (LE) and Closing Disclosure (CD) carefully before closing day.

✅ Tips for a Smooth Closing:

• Respond quickly to escrow requests and document deadlines

• Avoid major financial changes during escrow (like buying a car or switching jobs)

• Schedule your final walk-through before signing

• Make sure wire transfers are verified to avoid fraud

• Ask questions—no one expects you to be an expert

📅 Final Thoughts

Escrow and closing costs may seem like fine print, but they’re essential pieces of a successful real estate transaction. Understanding how these work—and what to expect—can help reduce stress and set you up for a smooth closing day.

Have questions about buying or selling in Southern Oregon?
We’re here to guide you every step of the way—whether it’s your first home or your forever home.