Since most people deal with escrow infrequently, they need someone who will guide them through the escrow process. Escrow doesn’t have to be complicated, especially when you work with an independent escrow company and an experienced Escrow Officer who can efficiently guide you through the process.
There are many types of escrow transactions, but this article focuses specifically on Residential Sale/Resales: Defined as the act of buying or selling a previously owned home.
In a residential home sale, the buyer, seller, and their Real Estate Agents representing them start the process in motion. Typically, the seller’s Real Estate Agent will direct which escrow company to use for the transaction. If you, the seller or buyer, prefer to use a specific escrow company of your choosing, please relay this to your Real Estate Agent.
Here’s a glimpse of how the escrow transaction works and why you need it when buying a home.
What is escrow?
Very simply defined, an escrow is a deposit of funds, a deed, or other instrument by one party for delivery to another party upon completion of a particular condition or event. Escrow acts as a neutral third party to the transaction and facilitates a secure and successful closing process.
The main parties to the escrow are The buyer, seller, their real estate agents, lender, escrow, and title. Although you might deal with more parties during the course of the transaction (such as your Real Estate Agent’s Transaction Coordinator) for coordinating paperwork and monitoring timelines.
What “opens” the escrow? Typically, if an agent or broker is involved, they will provide the Escrow Officer with the information necessary for the preparation of your escrow instructions and documents (i.e. your Residential Purchase Agreement, Seller Disclosures, statement of Information, etc.)
Escrow instructions are then created, sent out for signature, and delivered back to the Escrow Officer. This begins the escrow process.
The Escrow Officer will process the escrow according to the escrow instructions, and when all required conditions are met, the escrow can be "closed." (Conditions can be any required item in the contract that needs to be fully executed and delivered. Such as amendments, deposits, and other stipulations in the contract or purchase agreement).
Each escrow, although following a similar pattern, will be different in some respects as it deals with your unique property and the transaction at hand.
What does Escrow do for you?
Escrow’s primary job is to follow the instructions given by the principals and parties to the transaction. They handle the funds and/or documents, paying all bills as authorized and responding to requests from the principals. Escrow Officers can only close the escrow and distribute funds when all terms and conditions have been met.
Escrow will also provide you with a final Closing or Settlement Statement in a Closing Package. This includes a breakdown of the purchase price, the funds deposited or credited to your account, payoffs on existing encumbrances and/or liens, the costs for all services, and a determination of the funds due to you at the close of the escrow. * P.S. Your closing statement and all other escrow papers should be kept virtually forever for income tax purposes.
What escrow does not do for you?
Escrow does not give real estate advice, legal advice, or act in the place of your Real Estate Agent or Broker. Most importantly, Elite Escrow does not email wiring instructions, ever. This is a gateway to fraud, and if you ever receive wiring instructions via email, call your Escrow Officer immediately from a business card or the number first given to you in your opening email, and contact your Real Estate Agent. I repeat: Do not act on wiring instructions from an email.
Why do you need escrow?
Whether you are the buyer, seller, lender, or borrower, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. Your escrow company is what safeguards your funds and documents while those funds and documents are in their possession.
You also need escrow because they make sure all provisions of the escrow have been met in order for you to receive funds and/or convey title.
Purchasing a home might be one of your biggest financial decisions. Using an independent escrow company ensures your transaction and assets will be handled by a 100% neutral third party. Think of us as the “judge” in this hypothetical “real estate courtroom.” It is our job to remain neutral and unaffiliated with any other Real Estate Brokerage, Title Company, or real estate entity so we can process all the facts presented, follow instructions, and ensure everyone receives a fair transaction.
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As a privately held, licensed company, Elite Escrow Services of San Diego is required to be a member of the Escrow Agents’ Fidelity Corporation (www.eafc.org). No other escrow provider has such stringent requirements. We have been in business since 1971. Our long-standing history, secure practices, and reputation for superior service are proof that you can trust us to be your escrow company for life.
