What is escrow? Escrow is an arrangement between a seller and buyer in which a third party will hold money or documents, then dispense them according to instructions on which both parties have agreed. What this means in simple terms is that a title company officer holds on to the moneys and the deed to the property, until the conditions that the buyer and seller agreed on have been met. The escrow agent then delivers the funds to the seller, and the deed to the buyer. The escrow agent is also takes care of closing the escrow account, and providing both parties with a statement which lists the details of the closing terms.
Selecting an escrow agent is a joint decision between the buyer and the seller, generally the realtor has one that they suggest. Make sure that the agent you use has experience in handling your type of escrow transaction. Also, before deciding upon an escrow agent, it is wise to investigate the company the agent works for.
Must I Use Escrow?
It is not required to use an escrow agent in real estate, but you will have a hard time finding a bank or lending institution that does not require escrow. This is due to the size of funds which is changing hands in the transaction. Escrow acts as a defense against either side not honoring the conditions of the transaction.
Escrow: Factors to Remember
When escrow proceedings begin, make sure to have your photo identification available, as well as the contact information of your home insurance providers. Closing usually occurs within one to two months, and the creation of the account provides guarantee that the money placed in escrow will not actually be disbursed until all terms have been met.
The process of buying a home is busy, time-consuming, and sometimes confusing. You will be pre-occupied with many duties, such as getting homeowner's insurance and employing a home inspector to assess the property. It is important that you communicate with your escrow agent. Return phone calls as soon as you can, and do not hesitate to contact him or her with any questions that arise as soon as possible. An escrow agent can only discuss escrow-related matters, but you need to know and comprehend all this information, in order to meet deadlines. Any obligations the seller has agreed to must be met, so you need to inform your agent if you are still not satisfied that the appropriate adjustments have been made. Always review every document for accuracy, and let your agent know of any corrections that should be made, or of any information that needs updating. As with all closing fees, escrow costs may fluctuate according to where the transaction is taking place and other factors.
If for any reason the original date of closing cannot be met, escrow can be canceled. Documents from both parties must be presented attesting to the need to cancel, and a fee may be charged for a return of the funds. However, assuming both buyer and seller have fully met the list of conditions before to closing; escrow can now come full circle and be dispensed.
It is not likely that escrow agents will hold onto files indefinitely, so make sure you have copies of everything. You will need to show the escrow documents to your tax preparer when you file taxes. Of course, when you purchase any property, you should always keep every document relating to the sale for your own records.
Escrow and closing proceedings can take a significant amount of time, and can be disrupted if there is an illness or other interruption. The primary goal is that buyers and sellers keep proceedings rolling in a timely manner. By staying informed, and making sure your needs as a buyer are satisfied, your escrow will soon turn to ownership.
Check out affordable Chula Vista homes for sale. For information on the communities of San Diego, look at our blog: California Community Guide.
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