If you are planning to sell your property, you may have heard of the term escrow. But what exactly is escrow and how does it affect the selling process? In this blog post, we will explain the role of escrow in a real estate transaction and what you need to know as a seller.
Escrow is a legal arrangement in which a third party holds money or documents on behalf of the buyer and the seller until certain conditions are met. The purpose of escrow is to protect both parties from fraud, breach of contract, or other risks. Escrow ensures that the buyer pays the agreed-upon price and that the seller transfers the title and possession of the property to the buyer.
The escrow process typically begins when the buyer and the seller sign a purchase agreement. The buyer then deposits a certain amount of money, usually 1-2% of the purchase price, into an escrow account. This is called earnest money or good faith deposit. The escrow agent, who can be a title company, an attorney, or a bank, holds the money and acts as a neutral intermediary between the buyer and the seller.
The escrow agent also collects and verifies all the documents required for the transaction, such as title search, inspection report, appraisal report, loan documents, insurance policies, etc. The escrow agent ensures that all the terms and conditions of the purchase agreement are met before releasing any funds or documents to either party.
The escrow process ends when the buyer receives the keys to the property and the seller receives the payment. The escrow agent then records the deed and disburses the funds according to the purchase agreement. The escrow agent also provides a closing statement that summarizes all the fees and charges involved in the transaction.
Escrow is an important part of the selling process because it protects both parties from potential problems and disputes. As a seller, you should work with a reputable and experienced escrow agent who can handle the transaction smoothly and efficiently. You should also communicate with your agent and your buyer regularly to ensure that everything is on track and that there are no delays or issues. By understanding the role of escrow in the selling process, you can have a successful and stress-free sale.
Keep it Foxy,
"Mr Foxy"
Damon H
Sales Manager & Founder