All about Escrow and How it Works in Real Estate
Buying real estate property is perhaps one of the most expensive things you would do in your entire life. We all know how expensive real estate properties can be. Then again, it will depend on your location and the type of real estate property you are planning to purchase. Nonetheless, it is best to consult a professional real estate agent for your real estate-related concerns.
If you are a first-time real estate buyer, it is understandable to feel a little bit doubtful towards the other party. Unfortunately, there are a lot of real estate scammers out there and you wouldn’t know immediately whether the one you’re transacting with is one of them. That is why you should only talk to trusted realtors for your real estate-related queries.
Basic facts about escrow
The term escrow is common in real estate and the financial industries. In the real estate industry, it involves a third party that keeps your payments for the meantime until you and the property seller mutually agree with the terms and seal the deal. In other words, the buyer (which represents you) and the seller cannot touch the money until the entire transaction is done.
Aside from money, the third party, also called the escrow provider, is also responsible for keeping the documents needed on the real estate transaction. The documents, like the money cheque, will only be released once the deal is already sealed. An idea escrow provider should be neutral and does not side with either party. You can know more about how this works by talking to a reputable seller’s agent.
How escrow works
If you are interested to buy a real estate property, you would have to agree on the given terms and conditions that come with it. For one, you may have to fulfill a specific amount in a given payment period. In return, the seller should provide the sold property and other important details to the buyer in good faith.
However, there might be instances that the transaction may not be completed for various reasons. For example, the buyer might want to inspect the real estate property first before deciding whether to go ahead with the transaction or not. Or perhaps the seller cannot proceed with the transaction unless with the assurance that he or she will get paid.
This is where escrow providers will somehow serve as a “referee” between both parties. The entity will ensure that both parties will agree with each other’s terms, satisfy both parties, and eventually proceed with the real estate transaction. Aside from real estate, escrow is also applicable in financial and other online transactions.
The risk of an online escrow
Unlike real estate escrow, online escrow can be riskier. This is because you would have to deal with an escrow provider that is miles away from you. Chances are you might encounter scammers in the other line. When you do get scammed through an online escrow, it can be hard to take legal action against the scammer who you might not have seen in person in the first place.
However, you can prevent getting scammed in an online escrow transaction. First, you should only deal with trusted sellers with a good reputation within the industry. You should also be extra careful when using your credit card in online escrow and other kinds of transactions. It is also important to deal only with reputable realtors if you are planning to buy real estate property.
Is escrow really necessary?
A real estate agent should be familiar with how escrow works. However, it is better to contact escrow providers. Just make sure to do your research when it comes to finding a trustworthy and reputable escrow provider. For one thing, the escrow system plays a vital role in your property purchase and the succeeding mortgage payments.
As mentioned, the process of escrow provides guarantees for both the seller and the buyer. Also, an escrow can be an attorney, a bank, or a title company that is supposed to receive the signed agreement between the two parties. Of course, you will also have to make sure to deal only with a trusted seller’s agent when it comes to your real estate needs.
At the end of the day, it is both the responsibility of the buyer and seller to know who they’re dealing with. Real estate is a major investment, that is why both parties should do their part to ensure a smooth and hassle-free transaction later on. For more concerns about real estate buying, consult a trusted seller’s agent today.