Once an offer has been accepted by a seller and both parties have signed all of the pertinent dotted lines on the offer this document becomes the sales contract (or agreement). Next, the contract and all necessary paperwork and/or funds are collected and delivered to a neutral third party called an escrow holder.
During the escrow process, this neutral third party will carry out the provisions of the agreement between buyer and seller. An escrow holder is typically an escrow firm or title company. As with the other parts of your transaction, a good real estate agent can help you find an escrow holder in your area. Check the fees charged by the various escrow holders in the area. These fees may be negotiable.
The escrow officer carries out instructions from the buyer and seller, and ensures that ownership of the property is transferred from the seller to the buyer.
The escrow officer will also collect all of the odds and ends in the purchase process.
This includes proof of insurance, the preliminary title report, inspection reports, loan information and the like. The escrow officer will also prepare the final closing statement. The final closing statement is much like a bank statement, in that it lists all of the credits and debits associated with the purchase of the home. Compare the closing costs to those listed on the Good Faith Estimate received from your broker/lender.
You will typically meet with the escrow officer to sign a lot of documents. READ EVERYTHING! Take your time and ask questions about things you don t understand.
Hints on Closing
- Keep in close communication with your lender. Are there any problems with documentation on the loan Has everything been verified
- Keep in close communication with your real estate agent. Are there any problems with the home inspection Pest report
- Always be available for any questions from your real estate agent, escrow officer, loan officer, or anyone else involved in the buying process. Make sure you re in the loop with any issues that may arise.
- When it comes time to close escrow — that is, take possession of the house — clear some time. Figure out WHEN you d like to close, and then look at when you HAVE TO close. Are you moving at the end of the month from a rental to your new place Don t let delays leave you out in the street!
Ask your escrow officer for an estimate of closing costs. You won t know exactly how much you ll pay until escrow closes, but it is good to know these figures ahead of time.