How does Escrow work?

The general overview of the Escrow processes

If you wonder, does an Escrow account exactly work, below, you may find out how is the Escrow used in real, and what are the main steps necessary to complete. Understanding how it works may help you with your future contracts.

After the parties agree on executing the contract, Escrow is informed about that from the agents of both sides. Then, the new Escrow title is opened. Once the contract title exists, Escrow officers reach out to both parties with the aim to collect the needed information. All the details matter here for an Escrow Officer to carry out thorough research. Both sides have to prepare and submit the documentation packages, which are later passed to the lander from the Escrow officer.

Packages for both the buyer and the seller are similar. From the seller’s side, it’s important to ensure that any issues related to the seller’s name or the property are satisfied, e.g. there is no mortgage against the property. From the buyer’s side, one of the most important things to consider is what insurance company they use, and where their actual money is.

During the whole process, Escrow Officers work hard, being always available for any questions about the required Escrow instructions. It’s important to consider all those documentation processes in advance, as they may be some information that even the actual sides are not aware of and that could cause some issues later.

In 3 days after the contract is accepted, the buyer has to submit the earnest money deposit. Actually, it’s after the submission of the deposit that sides have the Escrow. The deposit is the step where the seller is no longer unsure about the buyer, as it shows that the other side is a real buyer, ready to allocate certain resources for the purchase. Also, that’s the background for the seller to do some research and identify if any factors can further prevent the contract from completion.

After all the information is collected, the next step is validating it. Sides should correspond to the Escrow instructions to close the contract. Usually, the lander and Escrow Officer are working closely for validating the buyer’s information, while the seller’s package is mainly reviewed by the Escrow Officer.

Once the validation process is completed, the Escrow contract is closed, the transaction is made and both sides are happy!

• Collection and validation of document packages.
• Earnest money deposit.
• Closing the contract.

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