Let’s talk all things escrow. Escrow…what is it and where is it? Depending on where you live, you will most likely be utilizing an escrow company during the buying and selling process of real property.
First, what is an escrow? An escrow is a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. It helps make transactions more secure by keeping the payment in a secure escrow account which is only released when all of the terms of an agreement are met as overseen by the escrow company.
But do you really need to use an escrow company? Escrows are very useful in the case of a transaction where a large amount money is involved and a certain number of obligations need to be fulfilled before a payment is released. While the payment is ‘In Escrow’ the transaction can be safely carried out without risk of losing money or merchandise due to fraud. This eliminates all legal jargon and allows for secure transactions and confident buyers and sellers.
You are probably wondering, can I trust the escrow company I choose to work with? Although the majority of escrow companies are honest and above board, the large sums of money handled by escrow companies can entice unscrupulous individuals to abscond with the funds they are holding in trust. And unless the escrow company is bonded, there is often no safeguard assuring the return of the money to consumers. Licensed escrow companies are consumers’ best bet for safeguarding their funds. All licensed escrow companies are required to be members of the Escrow Agents’ Fidelity Corporation (EAFC), which provides fidelity coverage for member trust accounts.
Curious how to find a reputable escrow company? Often your Realtor will find the escrow company for you so there is no need to worry about vetting them on your own. As your Realtor, I will make an introduction between you and the escrow officer right away. This way you can feel comfortable contacting them throughout the transaction when you have a question.
Hope that helps take some of the mystery out of escrow for you. Reach out to me if you are looking to buy or sell and I will guide you all the way through the process.