What Is Escrow?

One of the most confusing processes for the uninitiated to go through can be buying a home. At times it may seem that people are speaking a different language than they have ever heard before. This situation to often leaves a home buyer having to take on blind faith that the brokers, attorneys, escrow agents, inspectors and mortgage agents know what they are doing and acting in the buyers best interest.

The real estate agents at Ballen Network don’t want their clients to ever feel like they are in the dark. Here is a very short course to help spread a little light on the escrow process.

When Do You Enter Escrow

The escrow or closing process actually begins once you, the  buyer and the seller have agreed on a price and all the conditions for the sale. At the same time that the sales agreement is signed your real estate agent will collect an agreed upon percentage of the sale price from you and deposit it into an escrow account with an escrow agent.

This known as earnest money and as the name implies it is to show that you are earnest in your desire to buy the property. Think of it as a deposit.

What is an Escrow Agent

An escrow agent is a neutral third party who actually handles all of the funds and documents associated with the buying and selling of the property. Not being a party to the sale, in any way, their function is to make sure that all parts of the sale are executed in an equitable and legal manner. Like a referee or umpire the make sure the rules are followed and that everyone plays fair.

Steps of the Escrow Process

1. Entering Escrow- Set the sells conditions, sign the sells agreement, open and escrow account and deposit earnest money.
2. Bank Appraisal– You should be preapproved before you start looking for a home. Still the bank is going to want their own, independent appraisal to assure the property value will cover the loan amount. Note:  home buyer usually pays for this and if property cannot be sufficiently financed sale is cancelled and earnest money returned. This varies state to state and situation to situation. All is negotiable when creating the offers and counter offers.
3. Good Faith Estimate- Once financing is approved you will be given a good faith estimate detailing all of your finances (interest rate, closing cost, inspection fees, etc.) associated with the sale.
4. Obtain inspections– These may or may not be required depending on what area you are purchasing a home but a general home inspection is always a good idea. Some other inspections you may consider or be required to have are pest inspection, environmental inspection.
5. Acquire Homeowners Insurance- This is a condition of any mortgage but you don’t have to use their recommended insurance company. Shop around to find your best deal and coverage.
6. Receive Title Report and Title Insurance- These assure you that not one else other than the seller has any claim on the property. In real estate parlance, that the property is unencumbered.
7. Final Walk-Through– One last look around the property.
8. Review Form HUD 1- This is the finale detailed report of all cost associated with the purchase. Check it closely against the good faith estimate to make sure that no mistakes have been made or added cost tacked on.
9. Closing- The last step. Where all the money and finale paperwork gets taken care of. Be prepared to spend half a day signing your name

Shared from:  http://theballengroup.realtytimes.com/advicefromagents1/item/38695-what-is-escrow

Working with a Real Estate Closing Team

Most sellers & buyers think of the agreement as the tricky part of the transaction & the closing as the part they can take pretty much for granted.  Agents know otherwise.  As as agent, your work isn't done & your payment teeters in the balance until you successfully complete this final, challenging part of the real estate transaction.

The closing involves an army of people, & a good closing team can help you increase your prosperity by letting you efficiently wind up one deal so you can move on to the next.

•      Work diligently during the weeks leading to the close to see that the loan, title work, & escrow or document preparation are handled by people on your own closing team.  Make it your objective to direct the business to companies & individuals you know will perform in a timely, professional manner.  Doing so assures your clients good service & fewer surprises & reduces the time you & your staff invest in closing the transaction.

The Loan Officer

The loan officer holds a front-line position on your closing team.  He or she secures the appraiser, verifies deposit of funds, verifies employment, & ideally, completes the loan package for the buyer within a few days of contract acceptance.

• Make sure that the loan officer on your team is a great salesperson backed by a highly organized team that's able to push transactions through to a seamless close.  A good loan officer can smooth out problems before you even hear about them, averting landmines & sparing you significant & time-consuming challenges.

Loan officers can add considerable value to your businesses even beyond the sales closing.  When you form a relationship with a loan officer, you can work in concert to land clients.  You can follow up on leads together, or you can refer clients to each other; ultimately, you both win more business as a result of the relationship.

The Home Inspector

The home inspector is hired to evaluate the condition of the property, spot current or potential defects, & give guidance regarding the proper remedies.

On your closing teams, you want a home inspector who can quickly produce an easy-to-read report written in everyday language.  If technical jargon is necessary, insist on plain-English translations.  Nothing concerns buyers more than problems they don't understand.

• Work with home inspectors who are thorough & who fully disclose all defects & items in need of repair without throwing gasoline on potential problems.  Beware the home inspector who's an alarmist, & instead look for someone who has a "just the facts, ma'am" approach.

The Appraiser

Because lending institutions often have the largest stake in a home - greater even than that of borrowers - they hire appraisers to determine the value of property.

• Most lenders have relationships with a number of appraisers.  Even appraiser follows a unique valuation approach &, as a result, each interprets the value of a home slightly differently.  If you're working a deal & having trouble getting the property to appraise out at the sales price, ask your mortgage originator if another appraiser may be called upon.

• Some appraisers have  low-cost, limited-level memberships in the local MLS & therefore don't receive lock box keys.  The membership saves them money but creates an inconvenience for agents on whom they have to rely for access to homes.  Follow the once dumb-twice stupid rule:  If you have to drive out to a home just to open a door for an appraiser or, worse yet, to stand around & wait until the job is done, make it a point to work with a different appraiser in the future!  You'll find plenty of great appraisers that don't waste your time opening doors.

The Escrow Closer

An escrow closer is a neutral third party who coordinates the preparation & signing of documents, holds & distributes funds, & records the documents & deeds involved in a transaction.  Some states are non-escrow states, which means the real estate company provides these services, or in some states, an attorney prepares all the legal documents.  Check with your broker to clarify the standard operating procedure in your area.

A good escrow officer keeps the transaction on track for an on-time closing.  He or she also provides a second point of reassurance for your client by doing the following:

• Staying in close communication with you & the client throughout the weeks leading up to closing.
• Sharing updates that confirm things are going well.
• Underscoring what a great agent you are & how lucky the client is to be working with you.

The escrow company can also be associated with the title company, which researches the home's previous owners & encumbrances on the property.  Most lenders require title searches to ensure that titles are clear before they issue loans for properties.  Lenders are in what's called first position, meaning that they take control if buyers default on loans.

Shared from:  http://www.dummies.com/how-to/content/working-with-a-real-estate-closing-team.html