For many buyers and sellers, the stretch between an accepted offer and closing day feels like a black box. Documents fly back and forth, unfamiliar terms like "title commitment" and "excise tax" appear, and everyone seems to be waiting on someone else.
Barb Bishop knows this part of the process from the inside. Before becoming a real estate broker with Skyline Properties, she started her career in mortgage banking, title, and escrow, and she was named Employee of the Year at Stewart Title Company. With more than 30 years in real estate, she helps her clients understand what is happening at each stage so closing feels predictable instead of stressful.
Here is a plain-language guide to the escrow process in Washington.
What Is Escrow?
Escrow is a neutral third party that holds documents and money during a real estate transaction and carries out the written instructions agreed to by the buyer and seller. When all the conditions are met, escrow records the documents, pays out funds, and closes the sale.
In Washington, escrow agents are licensed by the Department of Financial Institutions (DFI) under the Escrow Agent Registration Act, with limited exemptions such as attorneys acting in their professional duties. Many residential closings are handled by a Limited Practice Officer (LPO), a closing professional certified under the Washington Supreme Court's Admission to Practice Rule 12 to select, prepare, and complete approved closing documents.
What Does Title Do?
While escrow handles the money and paperwork, the title company focuses on ownership. Title's job is to research the property's public records and confirm who owns it and whether there are any liens, unpaid taxes, easements, or other issues that could affect the sale.
You will typically see two key title items:
- The preliminary title report or title commitment: This shows what the title company found in its search, along with any exceptions or requirements that need to be addressed before closing. Buyers should read it carefully and ask questions.
- Title insurance: An owner's title insurance policy helps protect the buyer against covered problems with the title that were not discovered before closing. Lenders also typically require a separate lender's policy to protect their loan.
Step by Step: From Accepted Offer to Closing
Every transaction is a little different, but most Washington home sales follow a similar path:
- 1. Mutual acceptance. The buyer and seller sign the purchase and sale agreement. This starts the timelines for many of the contract's deadlines.
- 2. Earnest money and opening escrow. The buyer deposits earnest money as agreed in the contract, and escrow is opened with the closing company.
- 3. Seller disclosures. For most residential sales, the seller delivers the Washington seller disclosure statement (Form 17). Under RCW 64.06, the buyer generally has three business days after receiving it to rescind, unless otherwise agreed in writing.
- 4. Inspections and contingencies. The buyer completes inspections and works through any contingencies in the contract, such as financing or the sale of another home.
- 5. Title review. The title company issues its preliminary report, and any issues are addressed.
- 6. Financing and appraisal. If the buyer is using a loan, the lender completes underwriting and the appraisal.
- 7. Final documents and figures. Escrow prepares settlement statements showing all costs and credits for both sides.
- 8. Signing. Buyers and sellers sign their closing documents, usually at the escrow office or with a mobile notary.
- 9. Funding and recording. Once funds are received and documents are recorded with the county, the sale closes and the keys change hands.
Washington Real Estate Excise Tax (REET)
One cost that surprises many sellers is Washington's real estate excise tax. According to the Washington Department of Revenue, the seller usually pays REET. If the seller does not pay, the buyer becomes responsible, and unpaid tax can become a lien on the property.
Washington uses a graduated state REET, meaning different portions of the selling price are taxed at different rates. Under the current structure, the first $525,000 of the selling price is taxed at 1.10 percent, with higher rates applying to portions above that amount. The Department of Revenue notes that the thresholds are reset every four years, with new thresholds taking effect January 1, 2027. Local REET is calculated separately and added to the state rate.
Your escrow officer calculates the exact amount for your sale, and it appears on your settlement statement.
Protect Yourself From Wire Fraud
Real estate closings involve large sums of money, which makes them a target for scammers who send fake wiring instructions by email. Before you wire any funds:
- Verify wiring instructions by phone using a number you know is correct, such as one from your escrow company's official website or your original paperwork, not a number in an email.
- Be suspicious of last-minute changes to wiring instructions.
- Never send sensitive financial information through unsecured email or website forms. Barb's website specifically notes that documents such as Social Security numbers, bank information, and loan applications belong in your lender's or escrow company's secure systems.
Common Reasons Closings Get Delayed
A few issues come up again and again:
- Missing or late documents from the buyer's lender
- Title issues, such as an unreleased old lien or a boundary question
- Appraisals that come in below the purchase price
- Repair negotiations that take longer than expected
- Last-minute changes to the buyer's credit or employment
Many of these can be prevented or resolved quickly with good communication. That is where an experienced broker who understands title and escrow makes a real difference.
Frequently Asked Questions
Who chooses the escrow company in Washington? The escrow company is typically agreed upon in the purchase and sale agreement. Your broker can explain the options.
Do I need an owner's title insurance policy? An owner's policy helps protect buyers against covered title problems after closing. Talk with your title company about coverage.
Who pays the real estate excise tax in Washington? According to the Washington Department of Revenue, the seller usually pays.
Get Guidance From Someone Who Knows Both Sides
Whether you are buying or selling, Barb Bishop can help you understand what is happening at every stage of the transaction. Call 253-208-5041, email barbb@skylineproperties.com, or request a consultation.
Barb Bishop and Skyline Properties provide real estate guidance, not legal, tax, title, or lending advice. Consult the appropriate professional for advice about your situation.
