Escrow: An escrow agent is brought on to assure your place closes on time and the money exchanging part of closing goes smoothly. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an Internet purchase, PayPal is the secure third party that holds the buyer's money, and then sends the funds to the seller.
The escrow holder makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are performed prior to the sale being completed. This includes getting monies and certificates, completing required forms, and getting the release documents for any loans or liens that were paid off with the transaction, assuring you have a clear title to your home before the agreed upon price is fully paid.
The documents the escrow agent may obtain include:
- Fire and other insurance policies
- Title insurance policies
- 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
Upon finishing of all instructions of the escrow, closing can take place. All debts and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then get the title to the home and the title insurance gets issued as outlined in the escrow instructions.
The escrow holder gets a payment at the completion of closing. As your real estate agent, I'll let you know what is an acceptable form of payment.