Do you know what Escrow is? It might be helpful to know what goes on behind the scenes during your real estate transaction…
Most of have heard the term ‘Escrow’ and if you’ve recently purchased or sold a home, you may know a bit about it. But for many, when it comes time to negotiate your biggest financial investment, understanding the Escrow process can be a great relief during an otherwise stressful time!
What is Escrow?
Escrow opens when the buyer and seller sign a sales contract, or a purchase and sale agreement. Earnest money is also deposited in Escrow at this time. The contract, along with any additional instructions, serves as instructions for the escrow officer.
Escrow assures that the lender releases the home purchase funds at or about the same time that the deed is recorded to reflect new ownership. Escrow includes depositing, with a neutral third party, funds, documents and instructions necessary to complete the transfer.
Because the real estate transaction involves large sums of money and several documents, the Escrow process is not always a simple A-to-Z , step-by-step process. Very often, Escrow can become a confusing end game of details, last minute shuffles to get paperwork and other required documents in place before your transaction closes.
Who Takes Care of the Escrow?
Your escrow officer opens escrow by assigning your real estate transaction an account number and collects the contract and other instructions. The buyer’s deposit their Earnest Money and perhaps additional proceeds or documents related to the transaction. Deposits are either applied to the purchase price, or returned should the deal fall through.
What happens in Escrow Once my Deal Closes?
Once the loan is funded, contingencies are released and the title is cleared, only a few loose ends must be tied before close of escrow.
Remaining paperwork to sign a few days before close includes the buyer’s grant deed, any final escrow instructions such as how the proceeds are to be distributed to the seller and finally the settlement sheet of disbursements, title reports, the deed of trust lender forms, inspection reports, tax statements.
Now Escrow closes your deal and records a new deed in the buyer’s name. Lastly, the seller gets paid for the home, and all other monies are disbursed.
In some cases, money may be held in escrow after the close to pay taxes and even funds to pay contractors for any work orders that may have been negotiated during the transaction.
I am passionate about Real Estate and eager to answer all of your real estate questions! Text or Call me at 360-880-2356 or email me directly to ask about Buying, Selling or Investing in today's Real Estate Market - serving Lewis County & Thurston County, WA.
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Mountain Valley Real Estate