Escrow

An escrow account/officer serves as a neutral intermediary that holds all of the documents and funds related to the home sale/purchase transaction. The account will be opened on the first business day after the buyer and seller have entered into contract. Depending on region or local real estate customs, an escrow account may be managed by an attorney, escrow firm or title company.

At this stage in the transaction, there are fees that must be paid (e.g., an earnest deposit) and terms and conditions that must be met in order to satisfy any contingencies (such as a satisfactory home inspection.) The escrow officer will oversee the paperwork and funds related to the transaction while the buyer and seller negotiate and work out the final details of the sale/purchase. Once all of the terms of the transaction have been met, the escrow officer will distribute the funds, typically at settlement.

Escrow fees usually are based on the home’s sale price, and whether the buyer or seller is responsible for the fees is negotiable and sometimes dictated by local custom. For example, in a strong seller’s market, the buyer may pad his offer by offering to pay escrow fees even though it is customary to split the fees between buyer and seller.