The escrow process is a vital part of the home buying journey, ensuring that all the necessary steps are completed before the property changes hands.
Here’s a concise overview of the key aspects of escrow and what you can expect as a buyer:
1. What is Escrow?
Escrow is a neutral third-party service that holds funds, documents, and other assets during the home buying process. It ensures that both the buyer and seller fulfill their obligations before the transaction is finalized.
2. Opening Escrow
Once your offer is accepted, the escrow process begins. You and the seller select an escrow company, and the buyer deposits earnest money into the escrow account. The escrow holder then manages the transaction, ensuring that all conditions are met.
3. Title Search and Insurance
The escrow company conducts a title search to confirm that the property’s title is clear of any liens or claims. Title insurance is purchased to protect against future ownership disputes.
4. Contingency Removal
If your purchase agreement includes contingencies, such as securing financing or passing a home inspection, these must be resolved during escrow. Once contingencies are removed, the sale can proceed.
5. Final Walkthrough
Before closing, the buyer conducts a final walkthrough to ensure the property is in the agreed-upon condition. This step confirms that any required repairs have been made and no new issues have emerged.
6. Closing Escrow
The escrow company prepares the closing documents, and both parties review and sign them. The buyer deposits the remaining funds, the seller transfers the title, and the transaction is recorded, officially completing the sale.
7. Transfer of Ownership
After the sale is recorded, the buyer receives the keys, and ownership is officially transferred. The escrow process is now complete, and you can move into your new home.
This streamlined overview covers the essential steps in the escrow process, helping you understand what to expect as you move closer to owning your home.