What is Escrow?
Escrow is a process through which a buyer, seller, lender, and other parties may complete a real estate transaction safely and securely through a neutral third party or intermediary (the escrow company). During escrow, the escrow company follows written instructions and secures all documents and funds associated with the transaction until contract terms are met.
When do I need to open an escrow?
Escrow should be opened as soon as both parties come to an agreement; a commonly selected escrow officer should be called upon.
Why is escrow important?
Real estate transactions involve a great deal of money and legal responsibilities. Escrow is important because it allows all parties involved to conduct the transaction safely and securely with the knowledge that legal documents and funds will only change hands when the terms of the contract are met.
What does an escrow officer do?
An escrow officer will prepare documents and specific instructions. Also, an escrow officer will order all the required assignment statements, needed payoffs, title searches, and homeowners’ association records. An escrow officer will deal documents as instructed in the written agreements. An experienced escrow officer will also provide you with the service of closing your transaction promptly and adequately.
Who gets to choose the escrow company?
While the seller usually selects the escrow company, both parties must agree on which escrow company to use and it can be negotiated.
What can I do to prepare for the escrow process?
Communication is the most important thing to make escrow proceed as smoothly as possible. To avoid delays, 117 Escrow recommends buyers or sellers who will be out of town contact their escrow officer and loan officer. Avoid changing employment or incurring any new debt, as both will be verified before the loan closes. Buyers should take steps to get homeowner's insurance quickly to avoid delays. All closing costs must clear before escrow can close. Keep in mind that wire transfers can take 2-6 days while a cashier's check can clear in 1 or 2 days. A personal or corporate check can take much longer to clear and potentially delay the process.
How reliable is the estimated closing date?
At 117 Escrow, we will work to ensure your escrow closes on time. Still, many factors can affect the closing date, including lender approval, loan funding, how the closing costs are paid, title issues, and problems with the home appraisal.
How long does escrow take?
The real estate agent will usually determine the estimated closing date based on how long it takes for the lender to process the loan and how long it will take to ensure all contract terms are met. In most cases, at least 30 days is necessary before the transaction can close.
Who pays closing costs?
There are many fees and closing costs associated with a real estate transaction. In most cases, the seller pays for costs associated with ensuring the buyer has a clear title while the buyer pays for costs associated with financing. Escrow fees are usually split equally.
What does the escrow company do if there is a dispute?
If there is a dispute between the buyer and seller, be aware that the escrow officer can only follow escrow instructions as written, or modifications approved by both parties. Escrow officers are forbidden from favoring any party in a real estate transaction. If there is a dispute and the parties cannot reach a resolution, the escrow officer will stop processing escrow.
Can I Change My Escrow Company?
If the buyer and seller agree to switch escrow companies, both must agree upon a new company and notify the original escrow officer in writing. The escrow agent will need written instructions to transfer documents and funds to the new escrow company.
What happens at closing day?
Closing will occur once all written instructions in the agreement have been completed. Once all fees have been paid and monetary funds have been exchanged, the property title will be transferred. Transferred title will be mailed after closing.
What happens if an escrow transaction cancels?
A cancelling agreement must be set in place between both parties with agreed upon instructions along with original signatures for the inclination of documents and funds. Payment of any charges acquired should be contemplated. If the two parties cannot come to a mutual agreement, court involvement may be necessary.