What is Escrow?
Escrow is the deposit of documents and funds with a neutral third party, the escrow company, with specific instructions as to how they should be disbursed.
Escrow acts as the clearinghouse for the exchange and distribution of those documents and funds and assures all parties that the rules and regulations governing real property transfers will be strictly observed by a neutral third party with an objective interest in completing the transaction.
As such, the Buyer is represented by a Selling Agent and the Seller is represented by the Listing Agent.
Escrow acts as the neutral third party ensuring that both parties follow the escrow instructions.
What are Escrow instructions?
Escrow instructions AKA the Residential Purchase Agreement (the terms that Buyer & Seller agree upon)… These instructions include but are not limited to:
- Purchase price
- Amount of initial deposit (typically about 1% to 3 % of the purchase price) AKA Earnest Money Deposit
- Close of escrow (most escrows last about 30 days)
- Inclusions/Exclusions (i.e. flat screen TV on wall)
- Financing terms (cash, conventional loan, VA loan, FHA loan, etc.)
- Amount of time for Buyer to make all inspections, review and approve seller property disclosures and HOA documents (only if residence has a homeowners association), request any repairs, & lock in
financing (usually 17 days)
For More Info, See Escrow Timeline!