The Escrow Process

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Now that we have an accepted offer, we are well on our way to a successful closing!

e would like to introduce our TEAM and provide you with

all the contacts in our transaction.

Here’s a simple guide to the

escrow process and what you can xpect.

What is Escrow? The Escrow Process, also know as “Closing”, takes place when a Buyer and a Seller agree on the price and terms of an offer, with both parties signing the Purchase Agreement (Buyer’s offer contract). It is a process that occurs between a Seller accepts the offer and the Buyer gets the keys to the new house. Here’s a 10-step walk through the process:

Go into escrow/under contract and open an escrow account The Buyer’s earnest money check is deposited into an escrow account with the assigned escrow company, which acts as a third neutral party in the transaction. They will collect all the necessary funds and documents involved in the closing process. In some states Attorneys handle this process, which is called a “settlement” instead. Await the bank’s appraisal (for the Buyer’s loan) The bank doing the Buyer’s mortgage will perform its own appraisal of the property being purchased to protect its financial interests in case it needs to foreclose on the property. The Buyer usually pays for the appraisal fee. Buyer to secure financing At this time the Buyer should have received a pre-approval from his lender. Once a subject property address is provided to the Buyer’s lender, the loan process is initiated and the Buyer would have to provide the Seller a com-mitment letter within the specified loan contingency time negotiated in the contract. Approve the Seller’s disclosures During this step, you should receive written notification of any obvious problems that have already been identified by the Seller or the Seller’s agent. Obtain the necessary inspections It is to the Buyer’s best interest to obtain, at the least, a home and termite inspection on the property being pur-chased. This way the Buyer is aware of all the necessary repairs, which would give him the option to either pro-ceed with buying the home, negotiating for the repairs with the Seller, or walk away from the house.

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What is Escrow (cont…) Get hazard insurance This includes homeowner’s insurance and any extra coverage required in your geographic area (such as flood insurance). You will be required to have homeowner’s insurance until your mortgage is paid off. The Buyer is encouraged shop around for the best insurance rate. Acquire the title report and title insurance These are required by the lender, however the Buyer would want to get this to ensure that the title to the property is clear and that there are no other liens against the property. Title insurance protects both the lender and the Buyer from any legal challenges that could arise later is something didn’t show up during the title search (cloud on title). Do a final walk-through It’s a good idea to re-inspect the property just before closing to make sure that no new damage has oc-curred and that the Seller has left items specified in the Purchase Agreement, such as appliances and/or fix-tures. Review the HUD-1 form The Buyer should receive an estimated HUD-1, which itemizes all the loan terms, closing costs, real estate, and title/escrow fees involved in the transaction. The Buyer should compare it to the Good Faith Estimate that was initially provided earlier in the loan process. Both documents should be very similar. Look for un-necessary, unexpected, or excessive fees as well as outright mistakes. Close escrow The closing process varies by state, but you will be signing numerous paperwork, which you should take the time to read and review carefully before signing. Both Seller and Buyer will sign. After all the papers are signed, the escrow officer will prepare a new deed naming the Buyer as the new title holder to the prop-erty., which will be sent to the county recorder’s office. The Buyer is then instructed to either give a cash-ier’s check or wire the funds to escrow, which will eventually be forwarded to the Seller.

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6 Escrow Facts Know your rights!

Escrow instructions should specify in writing how and under what conditions monies will be disbursed, especially if the transaction doesn't close.

Escrow is a fiduciary relationship but is limited to the duties involved in the escrow. The escrow agent is a trustee of both parties and is equally responsible to both parties for the proper administration of the escrow.

If a transaction fails to close as scheduled, monies may continue to be held in escrow provided there’s no written demand from one party to cancel the contract. Monies are typically held after the closing date if the date to obtain a loan has passed but the parties still want to proceed with the transaction.

If the transaction is cancelled by either party, the agent holding the escrow monies shouldn’t disburse any funds until all parties agree in writing how to disburse them.

If parties can’t agree on how to disburse funds, the escrow agent may file an interpleader, which names all the parties that might have an interest in the monies and asks a court to decide how to disburse the money. Otherwise, an escrow agent may be obligated to keep funds indefinitely.

If a transaction is cancelled by the parties, real estate brokers and other third-party vendors may have first claim to escrow funds. That claim would depend on procuring cause. For example, if the transaction failed because the seller backed out, but the buyer’s agent had produced a ready, willing, and able buyer, the buyer’s agent might earn a commission.

Information provided by the National Association of Realtors (NAR).

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Introducing Our Team Your Realtor— Janice Reyes Mobile/Text: (510) 435-6568 E-mail: [email protected]

Escrow Coordinator— Anna Morris Mobile: (925) 755-0926 E-mail: [email protected]

Home Inspector— Jeff Kukuk Eagle Eye Inspection Mobile: (925) 698-0729 E-mail: [email protected]

Termite Inspector— GNG Termite Control, Inc Office: (925) 688-0510 E-mail: [email protected]

Title/Escrow Company— North American Title Company Escrow Officer: Paula Pioletti Office: (925) 634-0540 E-mail: [email protected]

The Escrow Process

Documents

Transcript of The Escrow Process