Escrow: To complete the sale of a house, a neutral, third party (the escrow holder) is brought into the picture to assure the process will close appropriately and on time. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an Internet auction, PayPal is the neutral third party that holds the buyer's payment, and then sends the funds to the seller.
Clearing the final hurdles like obtaining funds, completing forms, obtaining the documents for loans and liens, and assuring you get a spotless title to the home before your purchase gets finalized are all parts of closing in which an escrow holder is useful.
The documents the escrow agent may obtain include:
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
- Terms of sale and any seller-assisted financing
Closing on the home takes place when the steps of the escrow are finished. At this time, all payments and dues for inspections, title insurance and real estate commissions are taken. You'll then obtain the title to the home and the title insurance gets issued as noted in the escrow instructions.
The escrow company receives a payment when the closing is complete. As your REALTOR, I'll inform you of the acceptable form of payment.