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5 Steps You Cannot Skip During Escrow
Escrow is the endgame of the home-buying process. Commonly known as the “closing process,” escrow begins after an offer has been accepted in which the buyer, seller and other necessary parties get together to seal the deal.

While your real estate agent, lender and escrow officer may assist you during the process, you must prepare yourself by identifying the key steps of escrow. While there may be various steps involved, below are the five most important steps that you simply cannot skip.

Have a Solid Contract – The sales contract or purchase agreement is the blueprint for the escrow process and the real estate agent will typically write up the contract for review by the buyers and sellers. It should clearly state the terms of the deal and what must occur before escrow closes and the property changes hands. There should be no blank spaces in this agreement.

Clear Contingencies - Contingencies are contractual conditions that must be met and approved. Inspections, appraisals, and financing are common examples, although contingencies can be written for any event or issue. Contingencies may come with a time limit to complete the task. Once each contingency is completed, the buyer and seller should sign a document removing the contingency from the contract.

Review Title Reports – Review the preliminary report to verify the legal description of the property and to learn about any liens, encumbrances or other items affecting the property’s title.

Later, the title or escrow representative will want to know how you want to take title to the property. Common ways to hold title are:
  • Joint Tenancy
  • Tenancy in Common
  • Community property
  • Community Property with Right of Survivorship
  • Sole Ownership
Track Transaction Costs - In the end, title and escrow costs are combined with mortgage and other transaction costs on federally mandated closing documents. Obtain a Closing Disclosure to gauge what these costs may be, then compare them to the Estimated Statement, which is the line-by-line list of all mortgage and closing costs.

Be Prepared on Closing Day - On closing day, all documents should have been reviewed, questions asked and answered, contingencies removed or completed, the buyer’s lender has sent in the loan documents to escrow and the buyer has signed and provided any remaining funds for their down payment and closing costs.

The final step is the recording of the deed in the appropriate county recorder’s office and the escrow agent disburses funds to the appropriate parties. The deal is now closed, and unless indicated differently in the contract, the buyer receives the keys and officially takes possession of the property.

Adapted from an article on www.realtor.com by Angela Colley.

This material is not intended to be relied upon as a statement of the law, and is not to be construed as legal, tax or investment advice.  You are encouraged to consult your legal, tax or investment professional for specific advice.  The material is meant for general illustration and/or informational purposes only.  Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy. 


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