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Escrow: The Nuts and Bolts

To some home buyers and sellers, and perhaps to some less experienced real estate agents, the escrow process is something of a mysterious experience where a lot of money and documents change hands until a property is magically turned over to the new owner during a projected ‘close of escrow.’

In fact, at its essence, escrow is a clearing house – a neutral third party whose job it is to carry out all the written instructions agreed upon by buyer, seller, and lender, and hold in trust the buyer’s earnest money and other applicable funds and documents until conditions are met and the transaction can be completed.

But the escrow process has many moving parts, and having a reputable, approachable escrow officer can help demystify the experience and keep things moving toward a timely closing.

Here is what you and your clients can expect from your escrow officer

  • We receive and hold the buyer’s funds in a non-interest trust account
  • We review and comply with all agreements of the sale as detailed in the purchase contract and joint escrow instructions
  • We manage preparation of the grant deed (for seller’s signature) and the estimated closing statement and any other documents needed to clear title
  • We receive loan documents from the buyer’s lender and prepare estimated closing statements 
  • We order evidence of insurance from the buyer’s insurance agent and send the signed loan documents and all lender-required items to the new lender for funding
  • We submit original documents required to clear title to the title company for recording at the close of escrow
  • We ensure that escrow is in receipt of all funds necessary to pay the seller their proceeds and that the seller has sufficient equity in the property to cover all agreed upon costs, lien payoffs, and/or invoices
  • We make sure all required paperwork is in escrow to provide the buyer with clear title to the property
  • We ensure that all conditions agreed upon by the buyer and seller, and in writing through escrow, have been satisfied

When all escrow instructions have been carried out, the closing can take place. At this time, all outstanding funds and fees are collected and paid, including title insurance premiums, real estate commissions and termite inspections. Title to the property is then transferred to the new owner, title insurance is issued, and it’s time to turn over the keys.