Escrow: To finish the sale of a place, a neutral, third party (the escrow company) is engaged to assure the transaction will close correctly and on time. A home is said to be in escrow when in the closing transaction, money is secured by a third party on behalf of two parties when the transaction is taking place. For example, in an online auction, PayPal is the neutral third party that holds the buyer's funds, and then disburses the funds to the seller.
The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's contract are reached prior to the sale being finalized. This includes getting funds and documents, completing required forms, and getting the release documents for any loans or liens that were cleared with the transaction, assuring you have a clean title to your place before the final price is fully paid.
These are the legal documents that escrow companies usually look to collect:
- Tax statements
- 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
Upon finishing of all portions of the escrow, closing can take place. All debts and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the home is then transferred to you as buyer and correct title insurance is issued as outlined in the escrow instructions.
When closing is finished, you'll submit a payment to the escrow company. As your REALTOR, I'll let you know what is an acceptable way of paying.