Escrow in real estate is the process where all of the money in a real estate transaction is handled by a neutral party. These are title companies who are designated to be the fiduciary sworn to be fair about the process to serve both parties equally. They keep a balance sheet of both buyer & seller, and ensure that all of the settling of the money is balanced. They hold earnest money in an established trust account, and work with the lender to ensure that the finances for the loan have come through, and they record the title for the new owners with the county.
Here is the definition from Wikipedia: Escrow generally refers to money held by a third-party on behalf of transacting parties. It is best known in the United States in the context of real estate (specifically in mortgages where the mortgage company establishes an escrow account to pay property tax and insurance during the term of the mortgage). Escrow is an account separate from the mortgage account where deposit of funds occurs for payment of certain conditions that apply to the mortgage, usually property taxes and insurance. The escrow agent has the duty to properly account for the escrow funds and ensure that usage of funds is explicitly for the purpose intended. Since a mortgage lender is not willing to take the risk that a homeowner will not pay property tax, escrow is usually required under the mortgage terms.