What it is:
Escrow is the process where a neutral third party makes sure that all the parts of a real estate transaction are fulfilled.
An escrow company holds the buyer deposit and deed to the house until closing. They'll gather all the stuff needed to buy a home from legal documents to recording transactions. Then, they distribute funds based off of buyer and seller instructions.
How it works:
- After a buyer and seller sign & agree on an offer contract, the escrow company takes over.
- The company assigns an Escrow Officer and an Escrow Number – and escrow on your new home is officially open.
- The buyer will receive instructions about how to deposit their earnest money deposit.
- The buyer will make the deposit within three days of an agreed upon contract.
- The Escrow Officer holds all buyer-submitted money.
- They also secure a deed from the seller.
- After all the terms of the purchase contract have been met, the escrow agent releases funds to the seller and transfers the deed to the buyer.