Escrow: To finish the sale of a place, a neutral, third party (the escrow company) is employed to assure the transaction will close correctly and on time. A property is said to be in escrow when in the closing process, payment is secured by a third party on behalf of two parties when the exchange of money takes place. An easy way to understand the concept of what an escrow company does is to think of the use of PayPal for online purchases.
Clearing the final hurdles like taking in funds, completing forms, obtaining the documents for loans and liens, and making sure you get a spotless title to the property in preparation of your purchase gets finalized are all part of the job of the escrow agent.
Escrow companies collect the following documents:
- 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
You're ready to close when all parts are finished in escrow process. At this time, all payments and dues for inspections, title insurance and real estate commissions are taken. The property's title gets transferred to you and title insurance is issued per the policies of your particular escrow agreement.
At the close of escrow, payments of funds are made in an acceptable form to the escrow. As your real estate professional, I'll inform you of the acceptable way of paying.