The Escrow Process
The sale of real property involves transferring large sums of money and signing important documents by you, the Seller and your lender. Escrow is the process in which an impartial third party acts as a stakeholder and facilitator for both you and the Seller. Typically this entity is the Title Company. It carries out both parties’ instructions and handles the paperwork, distribution of funds, title insurance, and the transfer and recordation of the title deed.
Escrow is normally opened within one business day of acceptance of the purchase agreement and at this time your initial deposit as specified in the contract is deposited into the escrow account. The duration of the escrow period – from offer acceptance to recordation of the transfer of ownership – is usually 21 to 45 days.
Professional inspections probably constitute the most important part of your due diligence on the property, and are typically conducted within 15 days of offer acceptance. Please review the “Buyer’s Inspection Advisory” carefully. Inspection fees are usually paid by you, but the costs of issues that surface in the course of inspections are normally negotiable between you and the Seller (as specified in the purchase contract). It is vital you attend all inspections so you can see for yourself any problems that surface, ask pertinent questions of the inspector, and gain first-hand knowledge about property conditions and maintenance.
Sellers of residential properties and the real estate agents involved are required by law to disclose any material information known regarding the condition and circumstances of the property, and a number of statutorily required reports and disclosures will be supplied for your careful review. Sellers of probates and foreclosures are exempted from a number of these requirements.
Ideally, you’ve already been pre-approved by the lender of your choice prior to making your offer to buy. During the escrow process, the lender will have the property appraised, and review the purchase contract, title report and other documents it deems necessary prior to giving final loan commitment. This process usually takes two to four weeks. Before funding, it will typically confirm that your financial situation has not changed.
Home warranties are designed to protect you against unknown defects and failures in certain systems and appliances in your new home. We will provide information and referrals, outlining procedures, costs and coverage. Either Buyer or Seller may purchase a home warranty
Once you have completed your inspections and reviewed the reports and disclosures to your satisfaction, and received final loan approval, you will remove your contingencies of sale as specified in the purchase contract. Depending on how the contract was written, you may be increasing your deposit in escrow at this time.
Begin Moving Arrangements.
Review and Sign Loan & Closing Documents.
We will accompany you to the title company to sign documents. Before going to the title company to sign escrow papers, make sure to do the following:
Deliver the Balance of Funds
(down payment and closing costs) needed to close escrow to your title company at least two business days prior to closing in the form of a cashier’s check or wire transfer.
Receive Your Closing Documents From Paragon and the title company.
After both Buyer and Seller have completed their contractual obligations, and closing documents have been signed, your lender will wire the loan funds into the escrow account. Your title company will then record the title deed and loan deed of trust at the Recorder’s Office. You are now the proud owner of your new home and the keys will be personally delivered to you. Occasionally Sellers may request the right to rent back the property after the close of escrow for a short period of time. If you agree to a Seller rent-back, the terms are negotiated as part of the purchase contract. It is typical for the Seller to pay prorated rent equal to the principal and interest costs of your loan plus property taxes and insurance (PITI).
WHAT TO KEEP FROM YOUR CLOSING
- The Real Estate Settlement Procedures Act (RESPA) statement. This form, sometimes called a HUD 1 statement, itemizes all the costs associated with the closing. You’ll need this for income tax purposes and when you sell the home.
- The loan documents and the Truth-in-Lending Statement.
- The title deed of the property.
- Home insurance policy.
- Copies of all documents pertaining to the home purchase: contract, addenda, reports, disclosures, and any other documents received during the process.
GUIDANCE DURING ESCROW
There are many reports, inspections, documents, disclosures, contractual obligations and important dates during the escrow period. When working with Liz McCarthy, we are committed to providing guidance and representing your best interests through every step of the process. As a part of the service we provide, we:
- Assist you in understanding the complex purchase contract which delineates all the rights, responsibilities and obligations that will define the purchase and escrow process. There are many important decisions to make during the preparation of the offer and we will counsel you to the best of our ability to enable you to make informed decisions.
- Provide you with recommendations for any qualified professional resources required during the escrow and due diligence period.
- Coordinate with the loan agent and appraiser to arrange for entry to the property, supply all necessary documents, answer any questions regarding the home or neighborhood, and provide the most recent comparable sales.
- Coordinate and attend all inspections and assist you in reviewing and understanding the inspection reports. Ensure that any required corrective work is performed, and, if necessary, represent you in further negotiations pertaining to property conditions and circumstances.
- Assist you in reviewing and understanding the Preliminary Title Report. Assess whether additional information or outside professional resources are needed regarding any issues pertaining to title.
- Assist in the collection, review and understanding of the many disclosures and statutorily required reports supplied by the Seller and listing agent. Help identify any red flags that require further investigation.
- Ensure all contingencies and other contractual obligations are met within the time specified or, if needed, negotiate extensions.
- Ensure that all appropriate closing documents are ordered and prepared for your timely review.
- Assist you in complying with local ordinances and laws associated with the sale.
- Ensure that you receive copies of all documents pertinent to the transaction.