So, you and the seller have finally come to an agreement regarding a house you deem as your new property after a spate of grueling negotiations. As the process of closing the transaction kicks into high gear, the house goes into escrow.
WHAT IS ESCROW?
Escrow is a legal arrangement that occurs after a seller accepts an offer to purchase. A third party is called upon to temporarily hold money or the property until conditions under the purchase agreement are met. This setup is meant to protect both the buyer and seller as the third party holds the buyer’s earnest money deposit and the homeowner’s funds for property taxes and insurance.
HOW LONG IS THE ESCROW PROCESS?
The escrow process varies per transaction but, on average, takes approximately 30 days. In some cases, escrow can take up to 60 days, but it is usually because of a problem during the closing process. The timeline can also be impacted by the buyer’s pre-approval or lack thereof, state regulations, the lender’s lengthy process to underwrite the loan, and contingencies based on the results of an inspection.
THE ESCROW PROCESS
To have a better understanding of what goes about during escrow, below is the step-by-step process:
- Open an escrow account: The buyer works with the agent to set up an account with a neutral third party to help manage the transaction.
- Secure results of the lender’s appraisal: To secure the financing, the mortgage provider schedules an appraisal during the closing process to ensure that the property value reflects the offered price.
- Secure buyer’s financing: Following the appraisal, the buyer uses the loan commitment to negotiate the financing and mortgage amount with their lender.
- Approve seller disclosures: Here, the seller informs the buyer of anything that may affect the home’s condition. The buyer can either approve each item or walk away from the transaction.
- Conduct a home inspection: Never forego this part of this process as the home inspection reveals the property’s true condition, especially flaws that cannot be seen during a walkthrough.
- Buy insurance: Lenders will typically recommend an insurance provider, and the inspection results should be considered and included during this time.
- Get a title report: This report indicates if there are tax liens or ownership claims on a property. It protects buyers from potential legal disputes regarding the property in the future.
- Conduct a final walkthrough: This allows buyers to confirm that all agreed-upon terms and repairs have been completed and no new damages occurred during the escrow process.
- Review the HUD-1 Form: This form will specify the buyer‘s and seller’s information and closing transaction details. Thoroughly check the document, particularly those relating to fees associated with the transaction, to avoid being overcharged at the time of closing.
- Close escrow: This is the final stage that entails signing documents. From here, the escrow officer will issue the new property deed in the buyer’s name. This is when the deed will be submitted, the down payment will be completed, and the buyer will receive the keys.
Escrow is among the more complex parts of the real estate transaction and is best explained by experts with years of experience in the industry. In the Sunshine State, you can’t go wrong with the experience and expertise of Brian Scharick and the rest of the Florida Exclusive Living team. We can also be your best guide in knowing the various Florida communities, especially those in Broward County, Palm Beach, and Miami-Dade.
Let us help you find your dream Florida home. Call us at 954.644.9118 or send an email here.