Escrow

What is Escrow?

New home buyers always asks. What is Escrow and why do I need it? Escrow is similar to your 401K account at work. Escrow is an arrangement where you use an impartial third party (the Escrow Company) to protect yourself during a transaction. Real Estate may be one of the biggest purchase in your life, so it makes sense to take some precautions. In a real estate transaction, escrow is where the money the buyer plans to pay the seller is held until all the specifications of the deal can be worked out and the deed can be transferred from the title company. We use escrow companies who have years of experience in keeping money safe and disbursing it at the exact right moment after recording and closing the deal.

Escrow and earnest money

When you purchase a home one usually gives the seller a small deposit known as earnest money deposit which tells the seller you are serious about buying their home. Since you don’t know the seller you make your deposit out directly to the Escrow company where it lives safely until it is either applied to the purchase price of the home at closing or returned to you if the deal falls through for any reason.