In a real estate transaction, an escrow account holds funds and documents until the closing of the sale. An escrow service provider is a neutral third party that manages the account and oversees the transfer of monies and other legal documents, such as purchase contracts and deeds, during the transaction. Below is an overview of this vital component of real estate, how it works, and the benefits it provides.

The Process

First, the buyer, the seller, and the buyer's lender draw up the terms of the escrow agreement. Then, the deal is sent to an escrow service who has no ties to any of the three parties involved. They review the terms of the document and collect all the funds and legal paperwork related to the sale, and they hold them until the terms of the agreement have been carried out successfully.

Depending on the property, the buyer or seller often agrees to pay for certain expenses, such as home inspections or repairs to the property. These details would be included in the escrow agreement. Once these tasks have been completed, the buyer or seller signs a contingency release form for each and the transaction proceeds to the next phase.

After all parties have satisfactorily completed their agreed-upon duties, the sale can close. The buyer authorizes the escrow service to transfer the necessary funds from the lender to the seller. Finally, the escrow service records the property title in the name of the new owner.

Benefits

The primary benefit of escrow is the protection it provides both buyer and seller. For the buyer, it ensures the seller fulfills their end of the purchase agreement. For instance, if the seller offers new kitchen appliances as part of the sale, then doesn't buy or install them as promised, the transaction will not proceed until the seller does what they agreed to do in the escrow agreement.

For the seller, it offers a safeguard in the event the buyer backs out. Typically, the buyer places a small percentage of the asking price in the escrow account as an earnest money deposit. If they back out without legitimate cause, the seller keeps that money.

An escrow service will guide you at every stage and make sure both buyer and seller have the support and resources for a smooth transaction. Scarab Title & Escrow Services provides a variety of real estate closing services, including escrow, to the Pasco County, FL, area. They also offer residential and commercial title insurance, title examinations and searches, and mobile staff to handle onsite closing document notarization. Call (727) 378-4553 or visit them online to schedule a consultation.