Escrow Explained In Simple Terms
es·crow
/ˈeskrō/
noun
a bond, deed, or other document kept in the custody of a third party and taking effect only when a specified condition has been fulfilled.
verb
place in custody or trust.
"those funds are escrowed for the purpose of improving municipal services"
What is the Importance of Escrow in Real Estate?
Escrow is essentially the use of a third party to hold on to funds during a big transaction. Specifically, in real estate escrow is used as protection for both the buyer and seller during the process of purchasing a home. It is a way to guarantee the seller that the homebuyer has the funds to purchase the property and guarantees the buyer that they will not be scammed by a fraudulent seller.
Since each party has by now agreed to the terms of a contract, escrow ensures each party will be held accountable and can not walk away on a whim. If rules of that contract were to be violated, the escrow agents are there to assist during any kind of legal process that may take place.
What Does the Escrow Process Look Like and What Are the Responsibilities of an Escrow Agent in a Real Estate Transaction?
To put it simply, these are the steps in the escrow process:
Buyer and Seller Agree on Terms.
Buyer Gives Funds to Escrow.
Seller Delivers Title to the Property.
Buyer Accepts Title to the Property.
Escrow Pays the Seller.
The responsibilities of an Escrow Agent are to:
Collect all funds and paperwork from each party involved in the transaction
Arrange a title search
Supply both buyers and sellers with closing instructions
Schedule the closing
Distribute all necessary funds to their respective parties
Ensure all transactions are properly recorded and documented
The Row Title & Escrow are experts when it comes to this service. From buying and selling to financing a home or investment property, the real estate transaction process can be a daunting task. Having the right closing agency is a key component to your transaction’s success. Our goal is to take away the stress of your real estate transaction so you can focus on, and enjoy, the new and exciting events happening in your life. Your smiles are why we love what we do.