Escrow: An escrow agent is used to assure your property closes on time and the transaction goes smoothly. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. A simple way to think of what an escrow company does is to compare it to PayPal for Internet purchases.
The escrow agent makes sure that all terms and conditions of the seller's and buyer's agreement are completed prior to the sale being finished. This includes receiving monies and records, signing required forms, and obtaining the release documents for any loans or liens that were paid off with the transaction, assuring you have a free title to your place before the final price is fully paid.
Escrow holders compile the following legal documents:
- Fire and other insurance policies
- 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
Closing on the house takes place when the steps of the escrow are complete. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. You'll then obtain the title to the property and the title insurance gets issued as agreed upon in the escrow instructions.
The escrow agent receives a payment when the closing is complete. As your agent, I'll let you know what is an acceptable way of paying.