Learn the Basic Escrow Process and What You Should Expect

Learn the Basic Escrow Process and What You Should Expect

If you are like most people buying or selling a house, you don’t know the first thing about what escrow is or what you should expect. While every situation is somewhat different, this is the basic process and what you should expect. If you have questions, check out our escrow resources or contact your Realtor.

What to Expect in the Opening Process

When escrow is opened, a copy of the purchase contract with all counters and/or addendums will be provided to the escrow company. The escrow company will then verify with all agents and/or parties before they create escrow instructions. The selling agent will deposit the good faith deposit at this point by following the terms of the contract.

What to Expect from the Title Company

The title company needs to verify the vesting of current ownership (i.e., that the person who is selling the home is the person who legally owns it) and whether or not there are any liens against the property. The title company will issue a Preliminary Title Report (PR), which the escrow company will then review, send out to the clients to be approved, send copies to agents and lenders, and discuss any potential issues with all involved parties.

Coordination with the Lender

The escrow holder will need all information on the lender as soon as possible. This includes their address, email address, phone number, and the name of the loan rep. The escrow officer will send the lender certified copies of all escrow instructions, the PR, certified copy of deposit funds, a purchase contract including escrow acknowledgment, and opening escrow and title fees.

Processing Escrow

Next, the escrow company will get all parties and/or their agents the escrow instructions. After those instructions have been read and reviewed, they need to be signed by all involved parties. It is important that the documents are signed exactly as they are typed or as they are amended. The sellers must sign their names the same way they hold the title. If there have been any marital status changes since the last Deed, make sure the escrow agent knows that.

The buyer can decide whom they want to be vested, which means how they want to hold the title. For example, they could hold title singly or a married couple. If the property is in a Trust, then the escrow company will require a copy of the Trust, and if a Power of Attorney is being used, then escrow will need a copy of the recorded POA.

These are a few of the steps involved in the escrow process. As you can see, it is very complex, and there is a reason that only specialized companies like Neighborhood Escrow handle it.

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