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How to Prevent Escrow Fallouts: A Guide for Real Estate Agents in LA and Beverly Hills

How to Prevent Escrow Fallouts: A Guide for Real Estate Agents in LA and Beverly Hills

By Christophe Choo Posted Oct 16, 2023 Beverly Hills, Latest Updates, Real Estate Advice for Buyers & Sellers, Real Estate Articles, What I'm Reading

How to Prevent Escrow Fallouts: A Guide for Real Estate Agents in LA and Beverly Hills | Christophe Choo at Coldwell Banker Global Luxury is Your Local Real Estate Expert.


Escrow fallouts are a common concern in the real estate industry, affecting approximately one in four transactions according to a report from Trulia. However, top-performing agents, particularly in high-stakes markets like Los Angeles and Beverly Hills, often manage to avoid such setbacks. In this blog post, we'll explore the primary reasons escrows fall through and offer actionable insights for agents to mitigate these issues, with a special focus on the unique challenges and opportunities in the Los Angeles and Beverly Hills real estate markets.

The Contingency Period

Typically lasting 10 to 20 days within a 30-60 day escrow, the contingency period is crucial. This is when buyers should finalize their loan and ensure the property meets their expectations. In markets like Beverly Hills and Los Angeles, where properties often come with a premium price tag and unique features, it's even more critical to use this period wisely.

Reasons for Escrow Fallouts and Solutions

  1. The Buyer Gets Cold Feet
    • Solution: Keep the contingency period short and engage actively with both the buyer and the seller's agent to resolve any issues. In high-demand areas like Los Angeles and Beverly Hills, a short contingency period can also deter non-serious buyers.
  2. Buyer Can't Secure a Loan
    • Solution: Ensure buyers are pre-qualified and have loan approval specified in the contract. Given the high property values in Beverly Hills and Los Angeles, having a 'back-up loan' is an excellent precaution.
  3. Inspection Reveals a Problem
    • Solution: Maintain a list of reliable tradespeople who can quickly and affordably address issues like asbestos or structural problems, which are not uncommon in older Beverly Hills estates or historic Los Angeles homes.
  4. Low Appraisal
    • Solution: While you can't choose the appraiser, you can ensure they see relevant comps, especially important in diverse markets like Los Angeles where property values can vary significantly within short distances.
  5. Inadequate Down Payment
    • Solution: Always verify the buyer's source of funds, especially in high-value transactions typical of Beverly Hills and Los Angeles.
  6. Unwillingness to Prove Financial Capability
    • Solution: Determine if this is a cultural issue or a negotiating tactic. In international hubs like Los Angeles and Beverly Hills, understanding cultural nuances can be crucial.
  7. Last-Minute Renegotiation
    • Solution: Make it clear from the beginning that renegotiations after the contingency period will not be entertained. This is particularly important in markets like Beverly Hills, where buyers may feel they have more negotiating power due to the high-value nature of the property.


Escrow fallouts can be a significant hurdle, but they are often avoidable with proactive measures. This is especially true in competitive and diverse real estate markets like Los Angeles and Beverly Hills, where stakes are high, and every transaction counts. By understanding the common pitfalls and how to navigate them, agents can significantly reduce the risk of an escrow fallout, ensuring a smoother transaction for all parties involved.

Adapted from an article published by RISMedia. This material is for informational purposes only and should not be considered legal, tax, or investment advice. Consult professionals for specific advice.

By being proactive and understanding the unique dynamics of the Los Angeles and Beverly Hills markets, agents can navigate the complexities of escrow more effectively, leading to successful transactions and satisfied clients.

Call Christophe Choo at (310) 777-6342 to tour your future home "HERE" or click "HERE" to estimate your home value.

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