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How To Understand The Escrow Process For The Seller
By Cory Shuett, 23 Jan 20:55
It may sound menacing to be “held in escrow,” as if someone is locked in a dark room. In reality, being held in escrow is similar to being kept in protective custody.
As soon as you agreed to your buyer’s earnest money, the check was given to your agent, the buyer’s agent or an attorney (an unbiased third party) to be held in escrow.
Anybody can place something in escrow. Suppose you own an original Picasso want to sell it, and a buyer offers $10 million for it. He gives you a $500,000 deposit check.
The buyer would not want you to deposit the check in your private account until he knows that the painting is genuine. You would not want him to take the painting until you had the balance paid, and a personal check.
You could hire an escrow agent to keep the check, authenticate all the forms and see you get the money deposited in your account.
Most people don't hear the word "escrow" until they buy or sell a property. It is a complicated term, because it can also refer to the state of being in escrow, the escrow agent and the escrow process.
There is also the closing of escrow, which happens only when the necessary documents are filed at the proper county office and all the funds are paid out.
Who Chooses the Escrow Agent?
In some places, the seller’s listing agreement states that the seller will decide the title and escrow companies. When a buyer makes an offer, however, it can contain language stating that the buyer will decide the escrow company.
In other places, like the western part of the country, where it is normal for an escrow agent or title company to manage closing, either the buyer’s agent or seller’s agent will initiate the escrow.
Normally, the seller chooses the title company and the buyer picks the escrow agent.
You can negotiate who manages escrow in the offer.
Either the seller or buyer can be accountable, provided that both parties express written consent.
Fees for Escrow
The escrow or closing agent will charge a fixed rate dependent on your sales price. Even though fees differ, sellers and buyers don't usually spend much time shopping. In general, they just take their agent’s advice.
The seller or the buyer can pay the fees, or they can be split. This depends on the local custom or the deal that is agreed to.
How is Escrow Opened?
Whoever is liable for beginning escrow will give the closing agent the earnest money check, a copy of the signed purchase and sales contract and the names and addresses of everyone concerned. From then on, the agent is responsible for all of the paperwork everyone will supply to arrive at the closing date.
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Tags: escrow