What is an Escrow?An escrow is an arrangement in which a disinterested third party, called an escrow holder, holds legal documents and funds on behalf of a buyer and seller, and distributes them according to the buyer’s and seller’s instructions.
People buying and selling real estate often open an escrow for their protection and convenience. The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the escrow holder to retain possession of the deed to the buyer until the seller’s requirements, including the purchase price, are met. Both rely on the escrow holder to carry out faithfully their mutual agreement.
An escrow is convenient for the buyer and seller because both can move forward separately but simultaneously in providing inspections, reports, loan requirements, deeds and many other items, using the escrow holder as the central depositing point. If the instructions from all parties to an escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions on their behalf without further consultation. This saves time and facilitates the closing of the transaction.
The escrow process was developed to help facilitate the sale or purchase of your home. The escrow holder accomplishes this by:
• Acting as the impartial “stake-holder,” or depository of documents and funds
• Processing and coordinating the flow of documents and funds
• Keeping all parties informed of progress on the escrow
• Responding to the lender’s requirements
• Securing a title insurance policy
• Obtaining approvals of reports and documents from the parties as required
• Prorating and adjusting insurance, taxes, rents, etc.
• Recording the deed and loan documents
• Maintaining security and accountability of credits and debits while providing consistent instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.
When you are buying a property, there are a lot of work to do on our part…we need to find a home, open escrow and then do our inspections and fund and close sometimes in as little as 30 to 45 days…
The following is a general guideline as to what to expect:
1. Get a Pre-approval
This will help you decide what kind of price range and area we should be looking for homes for you…
2. Find your dream home
3. Write an offer and submit offer with a initial deposit to seller
The initial deposit is also called a honest money deposit. It’s a good faith deposit to tell the sellers that we are serious and ready to buy! This check will stay in my hand, your agent, until the seller accepts our offer and open escrow. We will send the check to escrow company when escrow is opened, and then the money will be cashed by escrow company and stay with them until the the end of the escrow. At the end of escrow, that money will be applied toward your closing cost and down payment.
4. When seller accepts the offer, we open escrow and we send the initial deposit to the escrow company.
5. Normally we will have 14 to 17 days of buyer’s contingency period to complete the following:
• Home Inspection
• Loan Approval
Please note: you will have to pay home inspection and appraisal fees when we conduct the inspections…and these fees are non-refundable, if even you decided to not to buy this house later…they are part of the cost of buying a home…remember, if you are spending tons of money to buy a property, we better make sure that you know what you are getting yourself into before you buy it, right?
6. Remove All Contingencies
At the end of contingency period, we make sure that there is no issue with the condition of the property, no issue with the appraisal value, and you have a loan approval…then we will remove all contingency at this point…Please note, if you cancel after this period, you are breaching the legal contract and you will lose your deposit!
7. Sign Final Loan Doc
Finalizing your loan documents and at this time, you will bring any remaining balance needed for down payment and closing cost to the escrow company in the form of cashier’s check.
8. Final Walk Through
9. Escrow closed and the house is transferred under your name.
10. Possession of the property is delivered to you!
Now, you move in and enjoy your new home!