Let's talk about "escrow". To finalize the sale of a house, a neutral, third party (the escrow holder) is engaged to assure the process will close perfectly and on time. A house is said to be in escrow when in the closing process, payment is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. For example, in a Web transaction, PayPal is the reliable third party that obtains the buyer's money, and then disburses the funds to the seller.
The escrow holder insures that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being completed. This includes receiving funds and paperwork, signing required forms, and getting the release documents for any loans or liens that were cleared with the transaction, assuring you have a free title to your property before the negotiated price is fully paid.
These are the records that escrow agents usually compile:
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
Upon finishing of all instructions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. The house's title gets handed over to you and title insurance begins per the steps of your particular escrow agreement.
The escrow company gets a payment at the completion of closing. I'll keep you informed on the procedure.