An Overview Of The Escrow Account

Whether buying or selling real estate, you will inevitably deal with an escrow account If you are not familiar with an escrow account, here is an overview
An Overview of the Escrow Account
A real estate transaction is a high dollar transaction In fact, you will probably never make a bigger one in your life regardless of whether you are buying or selling Given the high stakes and the fact that feelings can sometimes get ruffled on each side of the fence, the escrow account was created
An escrow account is really a part of a larger beast known as escrow To keep the real estate transaction running smoothly and organized, escrow is undertaken A third party, known as the escrow agent, is retained to collect documents, money and such Since people can be tense during transactions involving large sums of money, it is important to have a party involved that is not emotionally attached
The escrow account is an industry term that can mean a few different things In its strictest sense, the account is a trust account opened to hold monies deposited by the parties for appraisals, inspections and remedial work It is also used to hold the money provided by the buyer for the purchase This is true regardless of whether the money is submitted directly from the buyer or a mortgage lender
In a larger sense, an escrow account refers to the total services provided by the escrow account In addition to finances, the escrow agent will collect contracts, documentation set out in the purchase agreement and so on In some sense, this makes the escrow agent the referee for the real estate transaction That being said, an escrow agent does not call penalties, to wit, they will never determine that one party or the other is in the wrong They will simply facilitate the requirements of the contract If one party fails to comply with those requirements, the escrow will not close and lawyers typically get involved
Escrow is standard operating procedure for nearly all real estate transactions In the end, it is an effective way to get the transaction closed

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Raynor James is with FSBOAmericaorg Visit our sell my own home page to learn more

Tags | account, agreement, mortgage, operating, purchase, referee, standard, transactions