An escrow account is one that is created by a purchase contract. The escrow holder is a neutral third party which is the depository for all monies, instructions and documents involved in the transaction.
- How does an escrow work? The escrow officer is responsible for completing all the terms agreed upon in the purchase contract. He or she will co-ordinate all the lender's requirements plus a commitment for title insurance.
- How is escrow opened? Either real estate agent can open escrow upon execution of the purchase contract by the simple expedient of depositing the earnest money check with the escrow officer or title company.
- What other responsibilities does the escrow officer have? In no particular order the escrow officer will also co-ordinate the following aspects of an escrow:
Request Title Insurance.
Ensure lender-required insurance policies are in force.
Ensure all property taxes, HOA dues, and insurances are pro-rated between buyer and seller.
Order payoff amounts from existing lenders, and co-ordinate funding from new lender to expedite a timely closing.
Assist both buyer and seller in signing and notarizing documents where necessary.
Upon closing, record documents with the appropriate authorities and disburse any monies due either seller or buyer.
- How do I go through escrow without losing my mind? Whether you are buying or selling a home, it can often be a stressful time. In order to alleviate those feelings it is, first of all, important to understand what the process entails and how a successful closing is achieved, as outlined above. At the outset, whether a buyer or seller, ask the escrow officer to give you a list of deadlines for each step in the process. That is the last day by which you have to complete that step. Then, make sure you complete each step as soon as it is requested of you, not at the last minute. That way, any unforeseen problems will not send the transaction into a tail-spin. You will have a buffer in which to right any wrongs. Most escrow officers are adept at dealing with contracts and stressed clients; heed their advice and you will enjoy a much more relaxed transaction.