The escrow company or entity is a third party which holds the funds during a real estate transaction. The escrow period typically begins when the seller accepts the buyer's offer. The period ends when the seller receives payment for the property and title conveys to the new owner by filing the deed with the appropriate government entity.
An escrow number is transaction specific. It does not apply to all real estate transactions on a specific piece of property, nor does it apply to all the real estate transactions by a specific buyer or seller. The escrow number applies to a specific transaction, on a specific piece of property, between a specific buyer and seller.
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During the escrow period, the title company or similar entity performs a title search on the property to establish the chain of title and the seller's rights to convey title to the buyer. The escrow company distributes the funds, put into escrow by the buyer or seller, according to the terms of the purchase contract. When checking on the status of escrow the buyer, seller or their agents use the escrow number to identify the correct transaction. Other parties, such as attorneys, lenders or inspectors also use the escrow number to identify the correct transaction.
Buying and Selling
When a real estate agent opens escrow, the escrow company typically gives him an escrow number for the transaction. That agent should then give the number to his client, and to the real estate agent on the other side of the transaction. This makes it easier for all parties to contact the escrow company and obtain information on the correct account.
Not everyone uses an escrow company when purchasing real estate. For example, a buyer might simply hand the seller the cash or a check as full payment for the property, and accept a quitclaim deed for the property. While this is risky for the buyer, as it offers no guarantees the seller has title to convey, it is one way the escrow process is skirted in a real estate transaction.