How Escrow Service Helps in Real Estate

Escrow refers to the deposits particularly the documents or funds that are held until successful completion of the terms of escrow. This is referred as a legal document in which the third party holds the assets in course of the period when the deal conditions were finalized by the two parties involved.

It can be a real estate property, money or any other forms of assets. It is used to protect or transfer business or personal property. The property can be intellectual property or business assets. Escrow services is generally linked with real estate transactions.

Let us look into how Escrow services helps in real estate:

Escrow acts as a mediator in real estate between the participants involved in the transaction, Title Company, agents, lenders, sellers and the buyers. Escrow acts as a holding place for documents, instructions and funds that are essential for buying homes. It includes the funds of the buyers for making down payments, funds of the lenders as well as documents for the new loan along with the deed of the seller.

When a buyer makes an offer and when a seller accepts it, the buyer needs to demonstrate good faith with a cash deposit. In case the conditions of the sale appear conducive but the buyer does not agree to go with the deal, escrow gives the cash deposits to the seller as compensation for taking off the property from the market, believing that the purchase process has been completed. The escrow agreement needs to carefully offer what constitutes and does not constitute a release event. The agreement must also clearly state the procedures for dispute resolution.

Escrow begins with the delivery of purchase contract by the realtor and deposit of money by the buyer to the escrow company. The company delivers the initial instructions prepared along with the related documents. Upon execution of the purchase agreement and the deposits made, the buyer applies for mortgage loans. Once the loan is approved, instructions are laid down by the lender that states the conditions under which one can disburse the funds.

Closing costs linked with the transaction depends on a variety of factors. The real estate commissions are generally paid after closure of the escrow from the proceeds of the seller. Title insurance is another item settled in course of transaction.

Through the different steps involved in “how escrow services helps in real estate”, it ultimately aims to ensure peace of mind of the buyers, sellers, Realtors and the lenders.