Let's talk about "escrow". To finalize the sale of a place, a neutral, third party (the escrow company) is employed to assure the transaction will close appropriately and on time. A home is said to be in escrow when in the closing transaction, money is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. For example, in a Web auction, PayPal is the secure third party that obtains the buyer's funds, and then sends the funds to the seller.
The escrow agent insures that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being completed. This includes securing payments and paperwork, completing required forms, and seeking out the release documents for any loans or liens that were paid with the transaction, assuring you have a clear title to your property before the asking price is fully paid.
Escrow agents compile the following forms:
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
You're ready to close when every step is finished in escrow process. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. The home's title gets handed over to you and title insurance is issued per the policies of your individual escrow process.
The escrow agent gets a payment when the closing is complete. You'll know when it's time to submit the form of payment.