What Exactly is Escrow?
Are you new to the real estate market? A few terms may be unfamiliar to you – and it’s true; why would you ever use “underwriter” and “liens” in your day-to-day conversations?
But that’s why Alliance Title is here to help break down the steps to owning your first home.
So, you’ve found the home, agreed on the price, and are now seeing all the “scary” documents come your way. You’ll be hearing “escrow” quite a lot – so, what is it?
In the real estate world, escrow refers to funds and documents that are held by an impartial third party (like AmeriTitle) on behalf of the buyer and seller and / or lender during the completion of the transaction.
Written instructions will be created and given to all parties involved, and it is only then that funds will be distributed and documents recorded in accordance to what the written instructions stated.
But why have an escrow, you might ask?
Not only is having an escrow convenient, but it act as protection for the buyers and sellers. All parties rely on the escrow holder to faithfully carry out their mutually agreed upon instructions – or, advise the parties if any of the instructions are contradictory or cannot be completed.
Once everything has been fulfilled within the terms and conditions of the written instructions, and all closing conditions are competed, the escrow is closed and the transfer of property and money is completed.
Escrow for the Seller
The seller is assured and feels confident that the transaction will properly close, and that the title will not pass to the buyer until the purchase price is fully paid.
Escrow for the Buyer
The buyer is able to review the condition of the title to property by receiving a copy of the Preliminary Title Report prior to closing, and of course, that the transaction will be properly completed and the title cleared.
So, there you have it! Escrows help protect both buyer and seller – so don’t eschew from them!
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