First, a little about "escrow". When you're closing on your new house, an escrow agent is used to assure the process will close appropriately and in a certain amount of time. A place is said to be in escrow when in the closing process, funds 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. An everyday way to understand what an escrow company does is to think of how you might use PayPal for Internet purchases.
The escrow agent makes sure that the terms and conditions of the agreement between the sellers and the buyers are reached in preparation of the sale being finalized.
These are the legal documents that escrow agents usually compile:
- 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
- Terms of sale and any seller-assisted financing
Upon finishing of all instructions of the escrow, closing can take place. At this time, all payments and fees for inspections, title insurance and real estate commissions are collected. You'll then secure the title to the home and the title insurance gets dispersed as agreed upon in the escrow instructions.
The escrow company gets a payment when the closing is complete. I'll keep you up-to-date on the next steps.