Escrow Red Flags Every Agent Should Watch For
Jennifer Davidson,
Owner | Office Manager | Senior Escrow Officer
Escrow can appear calm on the surface — funds held safely, documents moving along, deadlines tracked — but beneath that surface, small details can derail even the smoothest transaction. Experienced Realtors know that early detection of warning signs can mean the difference between a clean closing and a costly collapse. In this post, we’ll cover the most common escrow red flags agents should recognize, why they happen, and how to act before they turn into major problems.
The most common red flag appears before escrow even begins: missing or mismatched paperwork. Purchase agreements missing initials, unsigned disclosures, or inconsistent property details (parcel number, address, buyer names) can cause processing delays or legal risk.
Why it matters: Escrow officers must match all data points precisely across multiple documents — a single mismatch can halt the entire file.
Realtor Action: Review every page before submission. Use a pre-escrow checklist that includes names, addresses, APNs, and signatures. It’s a simple step that saves hours later.
When earnest money doesn’t arrive on time or the lender’s documentation trickles in late, the domino effect begins. Every escrow timeline — contingencies, inspections, appraisals, and closings — depends on those first few steps happening promptly.
Why it matters: Late deposits can breach contractual obligations and make the buyer appear uncommitted.
Realtor Action: Keep open communication between buyer, lender, and escrow. Remind clients to wire funds immediately after acceptance, and confirm receipt with the escrow team rather than assuming it’s done.
Wire fraud is one of the fastest-growing threats in real estate transactions, and escrow funds are a prime target. Fraudsters frequently send fake emails that mimic legitimate escrow officers, asking clients to redirect funds to new accounts.
Why it matters: Once funds are wired to a fraudulent account, they’re almost impossible to recover.
Realtor Action: Remind every client: verify wire instructions by phone using a known number. Escrow companies will never change wiring details via email. Incorporate this warning into your buyer welcome packet and your initial communication.
Sudden amendments — especially around closing — can be legitimate, but they can also signal issues: repair disputes, financing hiccups, or uncertainty about closing conditions.
Why it matters: Frequent or unexplained addenda may reflect lack of alignment between parties, and each amendment resets the clock on escrow review and approvals.
Realtor Action: Encourage your clients to resolve issues early. Communicate clearly with escrow before submitting revisions, and ensure all changes are mutually signed and timestamped to keep compliance intact.
Title issues are another hidden danger. Unknown liens, unpaid taxes, or missing releases can all stall escrow — and often surface only when title searches begin.
Why it matters: These issues can delay closing or completely prevent title transfer.
Realtor Action: Ask your escrow partner for early title reports whenever possible. The sooner potential liens or name discrepancies are identified, the faster they can be resolved.
Many “red flags” are actually communication breakdowns in disguise. Buyers don’t understand deadlines. Sellers forget disclosure timelines. Lenders fail to update escrow on conditional approvals. When that happens, everyone scrambles at the eleventh hour.
Why it matters: Communication delays create stress and erode trust.
Realtor Action: Establish a cadence of weekly updates — even if the message is simply “no changes this week.” A transparent process builds confidence and prevents small issues from escalating.
A proactive escrow officer is your early warning system. At Prosper Escrow, our team monitors timelines, verifies documentation, and flags potential issues before they disrupt your deal. When agents partner closely with their escrow team, red flags turn into routine problem-solving — not last-minute emergencies.
Realtor Tip: Introduce your escrow officer to your client early in the process. Building that direct line of communication can prevent many misunderstandings down the road.
Every Realtor faces the occasional rough escrow — but preparation and awareness make all the difference. By learning to spot early signs of trouble and relying on trusted escrow partners, you can keep your transactions on track and your clients confident from start to close.
About the Author
Jennifer Davidson, Sr. Escrow Officer and owner of Prosper Escrow, has spent nearly two decades mastering the art of escrow. Since beginning her career in 2006, her natural talent, attention to detail, and commitment to excellence have made her a trusted leader in residential sales, refinances, probate sales, short sales, mobile home transactions, and co-ops.
