Without a doubt one of the most confusing things for someone to go through is the home buying process. There are times that it might seem like people are speaking Latin. The situation can be very tense process and you need to take it on faith that everyone knows what they are doing. For those looking for some more information, here is a quick guide to the escrow process.
When Do you Enter Escrow
The escrow process begins once the potential buyer and seller agree on a purchase price, terms and conditions for the sale. When the purchase agreement is signed, the listing agent will send the documents to an escrow officer, chosen by the selling side. From there the earnest money deposit, that was agreed upon in the contract will need to be turned into that office.
The earnest money deposit implies that you are earnest in your desire to buy the property. It is a deposit into your future home.
The escrow officer is a neutral third party who handles the funds and documents for the transaction. The esrcow officer makes sure that everyone does what they are supposed to be doing as it is associated to buying and selling. They collect funds and disperse them where they need to go. They do this neutrally and do not take sides. Think of them as a referee or umpire, and make sure that everyone plays nice in the transaction.
Steps of the Escrow Process
- Entering Escrow- Set the sells conditions, sign the sells agreement, open and escrow account and deposit earnest money.
- Appraisal- You should be preapproved before you start looking for a home. The bank is going to want their own, appraisal to assure the property value will cover the loan amount. Note, this is a buyer paid expense. If the appraisal comes in lower than the offered price, it is possible to renegotiate the purchase price, but it is not guaranteed that the seller will want to do that.
- Good Faith Estimate- Once financing is approved you will be given a good faith estimate detailing all of your finances associated with the sale.
- Do Inspections- It is always a good idea to obtain a home inspection. You might also want to have a pest inspection. This will look for termites, wood rot and fungus.
- Acquire Homeowners Insurance- This is a condition of any mortgage but you don’t have to use their recommended insurance company. Shop around to find your best deal and coverage.
- Receive Title Report and Title Insurance- These assure you that not one else other than the seller has any claim on the property. In real estate parlance, that the property is unencumbered.
- Final Walkthrough- One last look around the property and make sure that it is in the same general condition as when you first got into contract.
- Closing- The last step before you close. Where all the money and finale paperwork gets taken care of.
- Keys- You’ll get your keys after the property records. This is generally a day or two after signing.
Congratulations! You have successfully navigated through the escrow process! It will hopefully be a smooth process, one that your Real Estate Agent can help you navigate!