What is Escrow and its importance in Real Estate?
Buying a house is not an easy job as it involves a set of processes and steps. One of the difficult aspects of buying a house is to understand the Escrow process or the ‘closing’. A ‘closing’ occurs in the interim term when the seller accepts the purchase agreement and the buyer finally gets the keys into the new house.
Below are some of the steps that will help you understand Escrow and its relevance in the real estate marketplace:
- Get into an Escrow contract and open an Escrow account. There is an agent involved in this process that serves as a neutral third party and handles the deal, documents as also most monetary transactions.
- Wait for the appraisal from the Bank that in most cases the buyer pays for.
- Organise the financing of the property.
- Check and approve the disclosures from the seller.
- Ensure that the necessary inspections are in place. They could be Pest Inspection, Environmental Inspection and other inspection like soil report, flood report etc.
- Get the hazard Insurance done. This refers to the homeowners insurance as also other insurance as in flood prone or earthquake prone areas.
- Ensure that the Title Report and the Title Insurance are in place and acquired.
- Do a final revision that all the process steps have been followed.
- Do a thorough analysis of the HUD 1 form.
- Close the Escrow.
Although most of the above steps are overseen by the Escrow agent who will guide you on your actionable at every step, it is always good to have a good idea of the Escrow steps. This is because, you are putting in a lot of money into buying your dream home and as such would want all your money to be utilised well.