An escrow account, in real estate, is an account run by an escrow company who maintains all of your essential belongings in a safe and secure holding area. These items are kept here until the deal has been closed and the house has been transferred from seller to buyer. Escrow officers are also bound by contract to keep these important items, such as money and personal documents, safe until the deal is closed.
An escrow agent is someone that usually comes from the real estate company in charge of conducting the closing, a title agent, or an attorney. He or she works with the buyer and seller to ensure that the transaction is completed in the most efficient way possible. This means ensuring the safe and secure transfer of private items and documents that are pertinent to the sale. Escrow shields all of the parties involved in the transaction from funds from the lender and property being exchanged until all of the conditions in the contract have been fulfilled.
Throughout each step of the closing process, the escrow company will file all of the essential documents. Upon completion of each step, the buyer or seller will sign off on a contingency that must be fulfilled. These can include home inspections, repairs, and other updates to the home. Once the contingency is fulfilled, the transaction can be pushed to the next step.
After all of the relevant conditions in the contract have been met and the transaction has been finalized, the money that the buyer owes the seller will be transferred from his or her lender to them. At the same time, the escrow officer will clear the title, and officially grant ownership to the buyer.
The cost of escrow will usually range from 1% to 2% of the total cost of the home. The buyer will perform an escrow deposit (or earnest money deposit), which is the money that buyers put into the escrow account once the seller accepts their offer on the home. Thereafter, the escrow company will keep the money safe until the transaction is completed.
If a buyer decides to back out of the deal at the last minute, the seller will get the money that the buyer put into the escrow deposit.
On the other hand, if the seller fails to fix any problems that are uncovered within the home, that they agreed to fix as part of a contingency, the buyer can hold off on any payment. The seller will not receive any money until this issue within the home has been fixed by the seller.
Consider Acuity for Title Services when Home Buying or Working with Home Buyers
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