What Is Escrow

Dated: 05/31/2015

Views: 7058

When buying or selling a home many people do not understand what escrow means or how it works.  Here is some helpful information on the meaning of escrow.  Thanks to First Arizona Title for providing the information:

What is Escrow?  Buying or selling a home is the largest monetary transaction most of us experience in our personal lives. Buying or selling a home or land usually involves the transfer of a large sum of money. As a buyer or a seller, you want to make sure that all the conditions of sale have dictated that money and all related documents be transferred through a neutral third party. This is called escrow.  In Arizona, escrows are processed by Escrow Officers.  Most of these are employed by Title Companies. Escrow Officers are people who have years of hands-on experience in handling all types of documents and large sums of money involved in transferring real property.The Escrow Officer serves as the neutral “stake holder” and the communication link to all parties in the transaction. The EscrowOfficer holds all documents and money until all conditions of the sale are completed, at which time he/she will impartially carry out the written instructions given by the principals in the transaction.  How is Resale Escrow Opened?  An escrow is opened by one of the real estate agents involved in the transaction. In some counties, it is traditional for the “listing”agent (the real estate agent who has the property listed for sale) to open the order. In other counties it is the agent representing the buyer who will open the order. Your real estate agent can give you guidance in the area. Today, many buyers and sellers are very knowledgeable about the process and both may have a favorite Escrow Officer and title company they wish to use. However, any question about “which title company” is always worked out before arriving at that point in the process!  When an “order” (or “file”) is opened, the agent will call the selected Escrow Officer. An “escrow number” is used to identify this transaction throughout the escrow (and, once the file is closed, on into the storage system used to safeguard these files). When the order is opened, the real estate agent provides all the information about the property (address, current owner, prospective buyer,buyer’s lender, outstanding loan information, sales price etc.). The agent may also send a set of instructions which outlines the details of the transaction, such as commission to be paid to the agent and expected closing date. The next step is to verify all of the pertinent information with the buyer’s agent. They will find out if a home warranty will be taken on the new home, when to expect the pest inspection to be completed, and other details which will affect the escrow. The Escrow Officer will also make sure that everyone involved in the transaction has his or her phone number, fax number, and email, as well as the escrow number. How is a Resale Escrow Closed?  When an escrow file is opened, the Escrow Officer makes a list of all the items necessary to close the escrow. These may include the buyer’s deposit, loan documents, fire and other insurance policies, home warranty, pest inspection, terms of the sale, and any seller-assisted financing, title insurance policy, and request for payment for various services to be paid out of escrow funds. Since most people have rent or lease payments month- to- month, escrow often closes at the end of the month so the buyer can move into their new home and avoid paying another month’s rent on the previous residence. The Escrow Officer cannot disburse any funds or information unless she/he is instructed to do so in writing. So when the necessary documents and money have been received into the file in accordance with provisions contained in your purchase contract and escrow instructions, the Escrow Officer will proceed with recording the necessary documents with the county recorder’s office, at which time title to the property is transferred and all funds are available to be disbursed.

If you have escrow questions contact Marsha Chapman at First Arizona Title!

For any of your real estate questions or needs please contact me at: 480-518-6636

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Aaron Stradling

Aaron Stradling is a native of Arizona. Having been born and raised in the valley, Aaron knows what is unique and special about the area. His background in real estate began at an early age with his f....

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