Understanding how Escrow works – Hickerson Realty, Tulsa, OK

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Tax statements

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

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Completing the Transaction

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Escrow: An escrow company is brought on to assure your property 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. An easy way to think of what an escrow company does is to think of the use of PayPal for online purchases.

The escrow agent makes sure that all terms and conditions of the seller's and buyer's contract are met prior to the sale being finalized. This includes securing funds and records, signing required forms, and getting the release documents for any loans or liens that were paid off with the transaction, assuring you have a free title to your place before the purchase price is fully paid.

Escrow companies compile the following forms:

Closing on the property takes place when all of the procedures of the escrow are done. At this time, all payments and fees for inspections, title insurance and real estate commissions are collected. Title to the property is then transferred to you as buyer and appropriate title insurance is issued as outlined in the escrow instructions.

When closing is in it's last step, you'll submit a payment to the escrow holder. As your real estate agent, I'll inform you of the acceptable way of paying.

The Escrow Holder Will:

Assemble escrow instructions
Request title search
Meet the bank's guidelines as noted in the escrow agreement
Receive funds from the buyer
Prorate interest, insurance, tax and other payments according to guidelines
Record deeds and other paperwork as instructed
Obtain title insurance policy
Close escrow when all terms of agreement of seller and buyer have been met
Disburse funds and finalize instructions

The Escrow Holder Will Not:

Offer advice - the escrow company stays a neutral, third-party status
Dispense opinions about future tax estimations

The Escrow Holder Will:		The Escrow Holder Won't:
Write escrow guidelines Request title search Comply with lender's guidelines as outlined in the escrow agreement Receive payments from the buyer Prorate insurance, tax, interest and other payments according to instructions Record deeds and other documents as instructed Obtain title insurance policy Close escrow when all instructions of seller and buyer have been finished Disburse monies and finalize instructions		Offer advice - the escrow agent must maintain a neutral, third-party status Give insight about tax implications

Mortgage Escrow Account

A Mortgage Escrow Account is started to make payments for on-going fees while there is a loan on the house. Escrow Accounts are contributed to monthly by the home buyer (who is now the homeowner), but there is also a lump sum that goes into the account at closing.

This is a quick run-down of the escrow process. Your individual process will be slightly different depending on your lender and your escrow company.

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