Escrow reduces the potential risk of fraud by acting as a trusted third party that collects, holds and disburses funds according to Buyer and Seller instructions. Escrow services are provided by a licensed and regulated escrow agent such as First American Title. First American is a neutral third party that performs the following functions to close a real estate transaction:

Receives a completed and fully executed purchase and
     sales agreement and/or lenders instructions.

Orders and delivers a commitment for title insurance
     to the parties of the transaction.

Orders all necessary payoff statements and demands
     to clear the title.

Prepares all necessary documents to transfer title.

Prepares the estimated and final closing statements.

Obtains all necessary signatures, funds and documents
to close the transaction.

Records and delivers all necessary documents and
disburses the funds according to the parties
  and/or lenders instructions.