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The state of California uses escrow companies to handle the closing of real estate transactions. Many other states use attorneys.
Escrow companies act as neutral third parties between the buyer and seller during a real estate transaction. They hold the deposit monies and direct all of the paperwork involved in the transaction, including loan documents, title insurance, appraisals, home warranties and homeowner's insurance. If the buyer or seller have specific instructions they want included in the transaction, they will relay this to the escrow company to ensure it is included in the close.
It does not matter if the buyer or the seller chooses the escrow company, because the escrow company acts on behalf of both parties and can not act unilaterally it must have agreement from both parties.
The escrow company should be licensed and bonded.