Let's talk about "escrow". An escrow company is hired to assure your property closes on time and the money exchanging part of closing goes smoothly. A house is said to be in escrow when in the closing process, money is secured by a third party on behalf of a buyer and a seller when the exchange of money takes place. For example, in an Internet auction, PayPal is the secure third party that obtains the buyer's payment, and then sends the money to the seller.
The escrow company makes sure that all terms and conditions of the seller's and buyer's agreement are completed prior to the sale being finalized. This includes securing monies and paperwork, signing required forms, and obtaining the release documents for any loans or liens that have been paid off with the transaction, assuring you have a free title to your home before the negotiated price is fully paid.
The documents the escrow agent may secure include:
- 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
Closing on the property takes place when the steps of the escrow are done. At this time, all payments and dues for inspections, title insurance and real estate commissions are taken. You'll then get the title to the home and the title insurance gets dispersed as outlined in the escrow instructions.
The escrow holder gets a payment when the closing is complete. As your real estate professional, I'll let you know what is an acceptable way of paying.