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Your Guide to Having an Escrow Account
When buying a home, there are many steps and important tasks that must be undertaken prior to finalizing the transaction. Not following the proper procedures or neglecting any requirements can have a significant impact on what could be a fairly smooth process.
Keeping track of all the procedures can be overwhelming for the layperson. Fees must be paid for various services related to the purchase, documents gathered by both buyer and seller, and funds secured from the buyer and held until they are transferred to the seller on closing day. The process is complicated and time consuming for any parties that aren’t conversant with the intricacies of a real estate deal.
Without meticulous attention to detail, a property transaction can be derailed, and the closing process will lead to disappointment, extra costs, and wasted time for all parties concerned in the transaction. Setting up a real estate sales escrow account with a professional escrow agency is a practical and popular way to help avoid this scenario and to help your transaction come to fruition without any issues or delays.
What is Escrow Used For?
Escrow is a neutral holding account for funds as well as a repository for critical documents involved in the process of selling and buying a home. An escrow agent can set up an account for you, which is usually done between 30 and 60 days before the closing date. This time is known as the “escrow period” and starts at the time that the contract is signed and usually ends with the closing when all fees, funds, and documents are transferred and signed.
Who Benefits from Having an Escrow Account?
An escrow account is valuable to both buyers and sellers. When the exciting time comes to close on a home, everything needed by both parties is brought to the table by the escrow agency. This helps eliminate unpleasant surprises and undue stress, placing the responsibility for all the details on the agency instead of the buyer or seller.
An escrow account can ensure that all financial responsibilities on the part of the buyer have been met and that all required documents from the seller are valid, up-to-date, signed, dated, kept safe and secure, and are present on closing day.
During the escrow period, items an escrow agent may hold for the buyer include: a down payment for the purchase, fees for appraisals and title searches, and the loan amount from your bank. This will help make sure that money that is earmarked for the purchase of your home will not be spent on other items, such as moving expenses or home repairs.
From the seller, escrow agents keep track of items such as deeds, inspection certificates, insurance policies, and other important documents related to the property. Likewise, this will ensure that everything needed for a smooth closing will be there.
What Else Will an Escrow Agent Do for Me?
In addition to ensuring that all funds and documents are secure and present for the closing, an escrow agent may also handle some of the actual processes required to bring about a successful closing. For example, the agent may order a title search for the buyer, arrange for the deed to the property to be recorded in the appropriate county agency, and determine the amounts due from both buyer and seller for necessities such as property taxes and homeowner’s association fees, including refunds, if necessary.
Who Pays for Escrow Fees?
The escrow company providing these services will charge a fee for their valuable time and work on behalf of buying and selling parties. During the initial draft phase of the contract, the buyer and seller ordinarily negotiate an agreement as to how to handle the escrow fees. There are three options: The buyer can pay the entire fee, the seller can pay the entire fee, or the buyer and seller can split the cost and include it in a final closing fee amount.
Having a qualified escrow agent to facilitate the many tasks involved in selling, borrowing, clearing the title, inspecting the home and so many other duties can mean the difference between a relaxed, easy closing day or a frantic or failed closing. The likelihood of a simple, quick closing is much higher when a professional escrow company is involved.
If you’re looking for an independent company that places a strong emphasis on their availability during the escrow process, look no further than Sterling West Escrow. We proudly serve clients in the greater Los Angeles area with any escrow needs they may have, and look forward to speaking with you soon.