During an escrow process, you can expect several key events and steps to take place. Here’s an overview of what you can generally expect during escrow:
Opening Escrow: Once you and the seller have reached a mutual agreement on the terms of the transaction, you will open an escrow account with a neutral third party, such as an escrow agent or a title company.
Deposit of Earnest Money: As the buyer, you will be required to deposit an amount of money known as earnest money into the escrow account. This demonstrates your commitment to purchasing the property and is typically held until the closing of the transaction.
Title Search and Insurance: The title company or escrow agent will conduct a title search to ensure that the property’s title is clear of any liens, claims, or other encumbrances. They will also issue title insurance to protect you against any unforeseen issues that may arise with the title.
Property Inspection: As the buyer, you may have a specified period to conduct a property inspection to assess its condition and identify any potential issues. If any concerns are raised, you may negotiate repairs or credits with the seller.
Review of Disclosures and Documents: You will receive various documents related to the property, such as disclosures, property reports, and legal agreements. It’s important to review these documents carefully and seek professional advice if needed.
Loan Processing: If you’re obtaining financing for the purchase, you will work with your lender to complete the loan application and provide any necessary documentation. The lender will appraise the property and underwrite the loan.
Contingencies and Removal: Certain contingencies, such as financing, appraisal, or inspection contingencies, may need to be satisfied within a specified time frame. Once these contingencies are fulfilled, you will need to sign a contingency removal form.
Closing Funds: Prior to the closing, you will need to deposit the remaining funds required to complete the purchase into the escrow account. This includes your down payment, closing costs, and any additional amounts as specified by your lender.
Signing Documents: Both the buyer and seller will sign the necessary legal documents, including the purchase agreement, loan documents, and escrow instructions. These documents will be notarized and held by the escrow agent until all conditions are met.
Closing: Once all the conditions have been met, the escrow agent will coordinate with the lender, title company, and other parties involved to finalize the transaction. The funds will be disbursed to the appropriate parties, and the property’s ownership will be transferred to you.
Recording and Release: The title company will record the deed and other necessary documents with the appropriate government office to officially transfer the ownership of the property. Once recorded, the escrow agent will release the funds and close the escrow.
It’s important to note that the specific details and timeline of the escrow process can vary depending on local laws, customs, and the complexity of the transaction. Working closely with your real estate agent, escrow officer, and other professionals involved will help ensure a smooth escrow process.