Let's talk about "escrow". When you're closing on your new home, a neutral, third party (known as the escrow holder or the escrow agent) is used to insure the process will close correctly and in a timely manner. Escrow agents hold money for "safe-keeping" in transactions between a buyer and seller. For example, in an Internet purchase, PayPal is the neutral third party that holds the buyer's funds, and then hands over the payment to the seller.
The escrow agent makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are reached prior to the sale being finished. This includes securing funds and documents, signing required forms, and getting the release documents for any loans or liens that have been paid off with the transaction, assuring you have a clear title to your property before the final price is fully paid.
The pieces of paperwork the escrow company may collect include:
- 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
- Title insurance policies
You're ready to close when all steps are done in escrow process. At this time, all payments and dues for inspections, title insurance and real estate commissions are collected. Title to the property is then given to you as new owner and appropriate title insurance is issued as noted in the escrow policy.
The escrow agent receives a payment at the completion of closing. As your real estate professional, I'll inform you of the acceptable form of payment.