Escrow accounts do sound complicated and can often confuse many first-time homebuyers. Quick confession to be made: The first time I heard of an escrow account, my grey matter (which doesn’t seem to be much, by the way) confused it with the French word “escroc” (which literally means crook).
But, I’m here to tell you that the only biggest misconception about an escrow account might just be that it only sounds confusing; otherwise the whole idea is pretty much simple.
You see, an escrow account is quite similar to a bank account in that it keeps money, however, the money is held with an escrow business. The money will be released by the escrow business only if certain requirements are satisfied.
A thorough step-by-step guide is given below to help you set up your escrow account.
Setting Up An Escrow Account For Real Estate
Evaluate Your Need For An Escrow Account
Real estate transactions are the most typical application for escrow accounts. When the selling criteria are met, the escrow agency will release the funds to the seller. As a result, the escrow agent secures the transaction by ensuring that each party fulfills its responsibilities.
Go Through The Purchase Agreement
You can open an escrow account through an escrow agency. In most cases, the escrow business should be named in the purchase agreement by the real estate agent. Locate and read your purchase agreement to get the name of the escrow business you should choose.
Now, if you use an agent to buy or sell a house, the agent should handle the escrow account setup.
How To Find An Escrow Agent?
You must find an escrow agent on your own. You might be selling your property in a “private sale,” which means you won’t be utilizing a real estate agent. You will need to find an escrow agency in this case. You can discover an escrow agent through the following channels:
- Inquire with your bank about escrow services.
- Look for escrow agents on the internet. You may use your preferred search engine to enter “escrow firm” and “your city.” You can reach us at the number given.
- Make contact with a title insurance company. They will occasionally open an escrow account.
Collect Important Information
To open the account, you will need to furnish the escrow business with specific details. The information required may differ significantly from one firm to the next, but in general, you will need to give the following:
- name and address of the seller
- name and address of the buyer
- the purchase price, address, and property description
- Termite report details, such as who will do the inspection
- information on funding
- whether there is any rent
- any personal item that is being sold
- deposit amount to be maintained in the escrow account
Pay A Visit To The Escrow Company
Set up a meeting to finish the relevant documents. Escrow accounts can be opened by either the buyer or the seller, however sellers are more likely to do so. You must bring the deposit with you. You will also need to go over the terms of the sale.
An important point to remember is that the escrow agent is responsible for ensuring that both the buyer and seller meet their duties. So, you should discuss your escrow duties with the escrow agent. You should carry a copy of your purchase agreement because it contains the majority of the duties.
Your Escrow Number
This is the identifying number you will need anytime you contact the escrow agent with queries or to get updates. Make a note of it and keep it somewhere accessible, such as in your handbag or on your mobile phone.