Escrow: To complete the sale of a home, a neutral, third party (the escrow holder) is brought into the picture to assure the transaction will close correctly and on time. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an online auction, PayPal is the reliable third party that holds the buyer's money, and then sends the payment to the seller.
The escrow agent insures that all terms and conditions of the seller's and buyer's negotiated agreement are reached prior to the sale being completed. This includes getting monies and records, signing required forms, and obtaining the release documents for any loans or liens that were cleared with the transaction, assuring you have a clear title to your place before the final price is fully paid.
These are the legal forms that escrow holders usually look for:
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
Upon finishing of all instructions of the escrow, closing can take place. At this time, all payments and fees for inspections, title insurance and real estate commissions are collected. Title to the house is then transferred to you as buyer and correct title insurance is issued as outlined in the escrow instructions.
At the close of escrow, fees are paid in an acceptable form to the escrow. As your real estate agent, I'll inform you of the acceptable way of paying.