Escrow is a service that provides the public with a means of protection in the handling of funds and documents. It enables the buyer and the seller to transact business with each other through a neutral party, thereby minimizing their risk.
During the escrow, all parties involved give their instructions to this neutral intermediary, the “escrow holder” whose duty it is to assure that no funds or property will change hands until all instructions have been carried to completion. An escrow is an arrangement made under a contract between a Buyer and Seller. As the neutral third party, escrow is responsible for receiving and disbursing money and/or documents. People buying and selling real estate open escrow for their protection and convenience.
Both the buyer and seller expect the agent to carry out their written instructions associated with the transaction and also to advise them if any of their instructions are not being met, or cannot be met. If the instructions from all parties to an escrow are clearly set out, the escrow officer can proceed on behalf of the buyer and seller without further consultation.
Escrow officers are efficiency experts.
They are very good at prioritizing what’s next in an escrow process. Asking is not a bad idea. As an agent I translate a lot, but here’s the essence of what you can expect your e. officer to accomplish.
• Clears Title
• Obtains title insurance
• Obtains payoffs and release documents for underlying loans on the property
• Receives funds from the buyer and/or lender.
• Prepares vesting document affidavit on seller’s behalf.
• Prorates insurance, taxes, rents, etc.
• Prepares a final statement (often referred to as the “HUD Statement” or ”Settlement Statement”) for each party, indicating amounts paid in conjunction with the closing of your transaction.
• Forwards deed to the county for recording.
• Once the proper documents have been recorded, the escrow agent will distribute funds to the proper parties.
SUMMARY
Escrow is the process that gathers and processes many of the components of a real estate transaction. The sale is officially closed when the new deed is recorded based on the funds being transferred. The agent is a neutral third party acting on behalf of the buyer and seller under the Escrow Law as set forth in the State of California.
More often than not once we get into escrow the most unfounded perception is that E. and Title are not working for you. I have found escrow and title to be the greatest resource in problem-solving. They do indeed work for you. Sometimes they have to ask tough questions or deliver bad news. But they are also the ones that come up with the solutions how to solve title problems, and lender requirements. These people work very hard to make the deal happen.
Whether you’re on the buying or the selling side, remember escrow is working for you to help get the sale made. Remember, your escrow officer is a partner in the process of buying your home.
Congratulations if you’ve made it this far!