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What
is
Escrow?
The
Escrow
Process
Both
buyer
and
seller
deserve
the
assurance
that
no
funds
or
property
will
change
hands
until
all
of
the
instructions
in
the
Purchase
Contract
have
been
satisfied.
Buyers
and
sellers
submit
signed
documents
and
buyer’s
deposit
money
to
be
held
by
an
independent
neutral
third
party
(Escrow).
After
the
conditions
agreed
upon
by
both
buyer
and
seller
(in
the
Purchase
Contract)
are
satisfied,
Escrow
then
distributes
the
documents
and
the
funds.
The
escrow
holder
is
an
independent
neutral
third
party;
works
for
both
the
buyer
and
the
seller,
and
is
authorized
to
follow
the
specific
written
instructions
provided
by
both
parties.
Escrow
functions:
Receives
and
deposits
(into
escrow’s
account)
buyer's
initial
deposit
and
prepares
escrow
package.
Requests
"demands"
(pay-off
statements)
from
existing
lenders
and/or
lien
holders.
Obtains
seller's
notarized
signature
on
grant
deed.
Safeguards
grant
deed
until
all
terms
and
conditions
are
met
and
buyer’s
remaining
certified
funds
are
on
deposit.
Orders
title
search
and
receives
and
distributes
preliminary
title
report.
Calculates
prorations
pertaining
to
property
taxes,
rents,
insurance,
interest,
and
other
expenses
as
required.
Coordinates
with
buyer's
lender
throughout
the
escrow
process.
Orders
and
processes
buyer's
loan
documents.
Coordinates
buyer’s
signing
of
loan
documents
and
their
return
to
buyer’s
lender.
Receives
buyer's
final
down
payment
funds
and
coordinates
funding
with
buyer's
lender.
Orders
recordation
of
grant
deed
conveying
title
to
buyer
and
distributes
all
funds:
pays-off
existing
loans;
pays
other
required
costs,
such
as
termite
completion,
home
protection
policy;
etc.
Releases
net
proceeds
to
seller.
Simultaneously,
the
buyer
and
the
buyer's
lender
are
engaged
with
the
loan
approval
process.
Lender
duties:
Orders
a
credit
report
and
other
credit
documentation
as
required
(mortgage
ratings,
landlord
ratings).
Reviews
the
buyer's
credit
and
when
necessary
obtains
satisfactory
explanations
from
the
buyer
regarding
any
negative
credit
history.
Verifies
the
buyer's
sources
of
income.
Verifies
that
the
buyer
has
adequate
liquid
funds
for
down
payment,
closing
costs,
and
reserves.
Requests
an
appraisal
of
the
property,
and
verifies
that
the
property's
value
is
equal
to
the
contract
sales
price.
Submits
the
loan
to
underwriters
for
final
approval.
Coordinates
delivery
of
the
buyer's
loan
documents
to
the
escrow
officer.
And
in
the
meantime...
While
the
escrow
officer,
lender,
and
buyer
are
diligently
working,
the
seller
also
has
responsibilities.
The
seller
and
the
listing
agent
must
now
prepare
detailed
disclosures
that
are
required
by
law
(smoke
detector,
lead
based
paint,
earthquake,
environmental
hazards,
zone
disclosures,
water
heater,
transfer
disclosure,
etc.)
Provide
escrow
officer
information
on
existing
loans
to
check
against
title
search
findings.
With
their
Realtor,
make
the
home
available
for
physical
inspection
and
other
trades
people
as
required
by
the
purchase
contract,
such
as
licensed
Termite
Company
and
lender's
appraiser.
Make
any
repairs
agreed
upon
in
purchase
contract.
In
order
for
your
escrow
to
proceed
smoothly,
your
Realtor’s
job
is
to
coordinate
and
oversee
the
above
chain
of
events.
Similar
to
dominos
–
each
event
must
occur
in
a
timely
fashion;
delays
in
any
event
may
result
in
the
postponement
of
escrow’s
scheduled
closing
date.
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