Escrow: To complete the sale of a property, a neutral, third party (the escrow agent) is engaged to assure the transaction will close perfectly and on time. A property is said to be in escrow when in the closing process, payment is held by a third party on behalf of two parties when the transaction is taking place. PayPal is a simple way to think of an escrow company.
The escrow company insures that all terms and conditions of the seller's and buyer's agreement are completed prior to the sale being finished. This includes securing monies and certificates, signing required forms, and seeking out the release documents for any loans or liens that were paid off with the transaction, assuring you have a free title to your place before the asking price is fully paid.
Escrow companies want to obtain the following records:
- Tax statements
- Fire and other insurance policies
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
Closing on the home happens when the steps of the escrow are done. All outstanding payments and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the house is then transferred to you as buyer and correct title insurance is issued as outlined in the escrow instructions.
When closing is completed, you'll make a payment to the escrow company. As your real estate agent, I'll let you know what is an acceptable way of paying.