Selection of a professional and responsive escrow company helps keep things moving forward – a source of comfort for all parties involved.
San Diego, CA (PRWEB) June 06, 2014
Last month, the California Association of Realtors released new market data finding the medium days on market for a home is 35 days. Once off the market, a smooth and quick escrow process is critical to complete the selling process. Buying and selling a house in California almost always involves the use of an escrow agent (also called an escrow holder). This individual and the company he or she represents is an independent and completely neutral third-party who acts as distributor and coordinator during the entire real estate transaction.
“The typical escrow process – which encompasses all activity from the moment a seller accepts a buyer’s purchase offer and the day the buyer moves in – lasts anywhere from one to two months, or from ‘open’ to ‘close,’” says Casey LeBlanc, president of New Ventures Escrow.
So what should a buyer and seller expect when starting escrow? LeBlanc outlines what happens at the very beginning and offers tips as to how to make the process go smoothly.
Due diligence in picking an escrow agent
The escrow agent or company deposits the initial good faith monies and holds on to any deed or other related legal and financial instruments. These funds are deposited in a highly regulated (and non-interest paying) trust account. “This ensures that the seller doesn’t receive any money from the sale of the house until the property is transferred to the buyer, while also acting as proof of the buyer’s earnest commitment to purchase the property,” LeBlanc notes.
In general, the seller relies on the real estate agent to recommend an escrow service provider. But, LeBlanc says, it is a point of negotiation between buyer and seller as a term of the Residential Purchase Agreement, and buyers can also fight for a different provider. It is often helpful for buyers and sellers to do some research on their own, such as getting answers to these questions:
- What kind of experience does the escrow service provider have?
- Can they provide customer testimonials?
- Are they conveniently located?
- Can the seller access information kept by the escrow company (for example, is this information stored in the cloud)?
- How do their fees compare with others in the field?
- Is the escrow company is truly independent and has no affiliation with a real estate company?
“It pays to conduct some due diligence concerning an escrow company’s qualifications before escrow gets underway,” LeBlanc says.
Starting the process
After the buyer’s purchase offer is accepted and an escrow company is selected, the real estate agent will send the fully executed purchase agreement to the escrow agent. Next the buyer will typically wire or send a check for the initial good faith deposit to the escrow company’s trust account (usually representing 1-3% of the purchase price).
The escrow holder will then prepare escrow instructions for review and signature by both the buyer and seller. These escrow instructions are considered supplemental instructions to the Residential Purchase Agreement.
These joint escrow instructions and agreement specify how the funds held in escrow should be disbursed. They also address agreements between both parties that pertain to any monies being transferred from one party to another.
The escrow officer is responsible for coordination between multiple parties (agents, lenders, vendors, insurance) to create the proper escrow documentation to be agreed upon by both buyer and seller.
A complex undertaking
The escrow agent’s duties span a wide array of tasks critical to a successful real estate transaction. In addition to holding onto the purchase funds, the agent:
- Keeps the flow of documents to all parties moving smoothly
- Updates all parties throughout the process on the escrow status
- Orders title insurance and secures issuance of title insurance policy
- Obtains approvals, reports, and documents as needed
- Prepare deed and loan documents
- Distributes funds for real estate commissions, recording fees, title insurance, loan payoffs, etc.
“Escrow is usually a complex undertaking,” LeBlanc says, “but selection of a professional and responsive escrow company helps keep things moving forward – a source of comfort for all parties involved.”