There are words in the world of real estate that may be unknown to sellers and buyers alike, such as the term "escrow." At some point along your home buying or home selling journey, you will come across this term. If this is a term you have never heard before, slight feelings of uncertainty may arise and hinder you from joining in on the excitement a new home brings to homeowners like yourself. So, to help you stay in the loop and enjoy every moment, let's go over what an escrow is and how it works for you.
An escrow account is a third-party account that holds a deposit of funds or legal documents, that ensures that the deposited items are secure during the process of a transaction between a buyer and a seller. When opening an escrow account, the buyer and seller will establish a list of terms and conditions for the transfer of ownership of property; the job of the escrow then is to ensure that those terms and conditions are carried out before any transaction is made, guaranteeing a legal transaction.
An escrow account will guarantee that your money or the deed to your property does not change hands before the terms and conditions have been fulfilled. This account is a neutral party, which means that both parties will be held accountable for their side of the transaction just as much as the other. For example, the buyer will be responsible for paying while the seller will be held responsible for handing over important legal documents to the buyer.
Escrow accounts are usually opened by the real estate agent of the buyer or seller. After the purchase agreement is signed, the agent will then place the buyer’s first deposit into the account and handle everything else from there.
Buying or selling a house can be a complicated process, especially when you are unsure of what is required at each step along the way to achieve your dream home. Thankfully, The American Dream keeps things simple, so you can enjoy your home buying and selling journey from start to finish. For more information about the home buying or selling process, contact your local real estate agent!