Get Answers to Commonly Asked Questions About the Escrow Process
Even people who have gone through the escrow process with a previous property sale are still often confused about what exactly it entails. The good news is that when you work with Neighborhood Escrow, we take care of everything – you do not need to need to know the ins and outs.
That said, if you would like to know more about our escrow process, keep reading to get answers to some of the most frequently asked questions. If you have additional questions, contact us at 310-378-2456 to get the answers you need.
What Exactly is Escrow?
It is a process in which a neutral third party (the escrow company) holds money and documents for parties who are involved in a real estate transaction. For example, the parties involved may be the buyer of the property, the seller of the property, the lender, the borrower, etc. Your escrow company agent follows all instructions as set out by all parties in the Residential Purchase Agreement and Joint Escrow Instructions. They make sure that all requirements are met and legalities are followed.
Why is it Necessary to Get Escrow?
It offers you the security and peace of mind you need when involved in a large financial transaction like real estate. When you have escrow, you know that your money or property is not going to change hands until all purchasing conditions have been met and all instructions have been followed.
How Does the Escrow Process Work?
First, the buyer, seller, borrower, and lender all agree on escrow instructions. Once that is done, they will deliver them to the escrow officer. In most cases, it is the real estate agent who offers the information needed for this process – along with input from their client.
When the escrow officer gest the instructions and required documents, they will process the escrow. The specific duties this involves will depend on the type of property transaction and the specific instructions that have been issued. For example, they may ensure that the instructions are mutually compatible, pay the bills they have been authorized to pay (such as taxes), respond to requests from involved parties, and handle the funds and documents as they have been instructed.
After the instructions are complied with, the officer closes out escrow and delivers the funds and documents to the parties as outlined in the instructions.
Who Pays for Escrow?
It is common for an activity involved in closing escrow to have fees associated with them. For example, there will likely be document transfer tax, inspection fees, fees for notaries, title insurance costs, and the cost of recording the grant deed. These fees will be paid as ironed out by the buyer and seller. It is common for the buyer and seller to split escrow company feels 50/50.
