38-WA-03 Washington Escrow Exam
Questions And Correct Answers
(Verified Answers) Plus Rationales 2026
Q&A | Instant Download Pdf
1. What is the primary role of an escrow agent in a real estate
transaction?
A. To negotiate the sales price
B. To act as a neutral third party holding funds and documents
C. To provide financing to the buyer
D. To inspect the property
Answer: B
Rationale: The escrow agent serves as a neutral third party
responsible for holding funds, documents, and instructions until all
conditions of the transaction are met. This ensures fairness and
protects both buyer and seller.
,2. Which document outlines the duties and instructions for the escrow
agent?
A. Deed of Trust
B. Purchase Agreement
C. Escrow Instructions
D. Title Policy
Answer: C
Rationale: Escrow instructions are the written directions agreed upon
by the parties, detailing how the escrow agent must handle the
transaction.
3. What is “earnest money”?
A. A loan from the seller
B. A fee paid to the escrow company
C. A deposit showing the buyer’s good faith
D. A commission for the broker
Answer: C
Rationale: Earnest money is a deposit made by the buyer to
demonstrate serious intent to purchase the property.
,4. Who typically prepares the settlement statement?
A. Buyer
B. Seller
C. Escrow agent
D. Real estate broker
Answer: C
Rationale: The escrow agent prepares the settlement statement,
detailing all financial aspects of the transaction.
5. What is the purpose of a title search?
A. To determine property value
B. To confirm legal ownership and identify liens
C. To calculate taxes
D. To inspect structural issues
Answer: B
Rationale: A title search ensures that the seller has clear ownership
and identifies any encumbrances affecting the property.
6. When does escrow officially close?
A. When the contract is signed
B. When the buyer moves in
, C. When all conditions are met and documents are recorded
D. When financing is approved
Answer: C
Rationale: Escrow closes when all contractual obligations are fulfilled
and the deed is recorded.
7. What is a prorated expense?
A. A fixed closing cost
B. An expense divided between parties based on time of ownership
C. A tax deduction
D. A broker commission
Answer: B
Rationale: Prorations allocate expenses like taxes or utilities between
buyer and seller according to their period of ownership.
8. Which party typically pays escrow fees in Washington?
A. Buyer only
B. Seller only
C. Shared between buyer and seller
D. Lender
Answer: C
Questions And Correct Answers
(Verified Answers) Plus Rationales 2026
Q&A | Instant Download Pdf
1. What is the primary role of an escrow agent in a real estate
transaction?
A. To negotiate the sales price
B. To act as a neutral third party holding funds and documents
C. To provide financing to the buyer
D. To inspect the property
Answer: B
Rationale: The escrow agent serves as a neutral third party
responsible for holding funds, documents, and instructions until all
conditions of the transaction are met. This ensures fairness and
protects both buyer and seller.
,2. Which document outlines the duties and instructions for the escrow
agent?
A. Deed of Trust
B. Purchase Agreement
C. Escrow Instructions
D. Title Policy
Answer: C
Rationale: Escrow instructions are the written directions agreed upon
by the parties, detailing how the escrow agent must handle the
transaction.
3. What is “earnest money”?
A. A loan from the seller
B. A fee paid to the escrow company
C. A deposit showing the buyer’s good faith
D. A commission for the broker
Answer: C
Rationale: Earnest money is a deposit made by the buyer to
demonstrate serious intent to purchase the property.
,4. Who typically prepares the settlement statement?
A. Buyer
B. Seller
C. Escrow agent
D. Real estate broker
Answer: C
Rationale: The escrow agent prepares the settlement statement,
detailing all financial aspects of the transaction.
5. What is the purpose of a title search?
A. To determine property value
B. To confirm legal ownership and identify liens
C. To calculate taxes
D. To inspect structural issues
Answer: B
Rationale: A title search ensures that the seller has clear ownership
and identifies any encumbrances affecting the property.
6. When does escrow officially close?
A. When the contract is signed
B. When the buyer moves in
, C. When all conditions are met and documents are recorded
D. When financing is approved
Answer: C
Rationale: Escrow closes when all contractual obligations are fulfilled
and the deed is recorded.
7. What is a prorated expense?
A. A fixed closing cost
B. An expense divided between parties based on time of ownership
C. A tax deduction
D. A broker commission
Answer: B
Rationale: Prorations allocate expenses like taxes or utilities between
buyer and seller according to their period of ownership.
8. Which party typically pays escrow fees in Washington?
A. Buyer only
B. Seller only
C. Shared between buyer and seller
D. Lender
Answer: C
