Taking the Mystery Out Of Escrow
Whether you are buying or selling your home, the term escrow comes up frequently in the process. To most people it is a mysterious place that our earnest money goes when we make an offer on a house. The escrow account is established when a contract to purchase and sell a home is signed. This account is managed by a neutral third party. The terms of the sales contract provide direction to the escrow officer on how to manage the funds that have been deposited and what the terms are for release. The escrow account remains open until the transaction is finalized and the new deed is recorded.
What is In an Escrow Account?
An escrow account holds more than just the earnest money deposit. The account will hold also the following:
- Earnest Money Deposit made to exercise the contract
- The Sales contract
- Title Information and Title insurance
- Legal Documents signed in relation to the sale of the home
- Instructions needed to transfer the deed to the new owners and the funds to pay off any existing loan
- Holds money needed to pay insurances and property taxes
Who Holds the Escrow?
The escrow account can be managed by a number of different entities. Regional preferences will determine who holds the escrow. In some areas of the country an escrow officer will act as the escrow agent. In other regions the escrow is held by a title company. Other areas will use a title attorney or escrow attorney to manage this account.
Job of the Escrow Agent
The escrow agent will hold all the important documents, including the earnest money. They will arrange to have the title search completed, will set the closing date and will disperse all funds that need to be paid in order to close the home. Payments will be made for taxes and insurance, to pay off any existing liens and to record the new deed and new lien at the courthouse.
On certain occasions the escrow will not close immediately after the home closing. If funds are held after the closing for any reason the escrow will not close until everything is finalized. This might include an issue that was identified and re-negotiated during the final walk through or repairs that were not completed by the closing date. Any of these circumstances can result in funds being held over until the issues are resolved.
Once the repairs have been completed and the seller has relinquished the home, then the escrow funds will be fully distributed and the account will be closed.
The escrow is managed by an impartial third party. That is the central premise to any escrow agent. At Realtyweb.com we hire the escrow agent and provide a hassle free experience with the closing. Our agent maintains all needed documentation and provide those to the buyer for their review. This enables all inspections, appraisals and other important disclosures to be reviewed by the buyer before the offer is made. When the buyer understands what they are buying the closing process is much faster and much smoother for all parties involved. To learn more about Rob Roham and Realtyweb, visit us at: www.realtyweb.com