The 5 Most Important Steps in The Escrow Process

The 5 Most Important Steps in The Escrow Process

The escrow process is the endgame of the home buying/selling process. It is when the seller, buyer, and other necessary parties gather to close the deal. While your real estate agent may help you during the escrow process, you should prepare yourself by identifying the most important steps you will face during the process.

While there may be various steps in the escrow process, following are the 5 most important ones that you simply can’t skip:

1. Have a Solid Contract

The purchase agreement or sales contract is the outline for the escrow process. The attorney or real estate agent usually writes the contract. The contract should state the terms of the deal clearly and should also mention what must happen before escrow closes and the property is sold. There shouldn’t be any blank spaces.

The contract will include details regarding the following specifics:

• What personal property is included in the deal?
• What happens if the escrow is delayed?
• What happens if the agreement fails?
• Who pays what cost?
• Financing arrangements
• The closing date
• Occupancy date

2. Clear Contingencies

Contingencies are predetermined conditions that must be met before the deal becomes official. Appraisal, inspection, and financing are common examples, however contingencies can be written for any issue or event. There are also time limits that accompany contingencies and are required to complete the task. Contingencies should be written in clear and precise manner.  After the completion of all contingencies, the seller and buyer should sign a document eliminating the contingency from the contract.

3. Review Title Reports

Normally, there are two types of title reports: an initial report and a final report that includes title insurance. Review the initial report to validate the legal description of the property you are buying as well as to learn about any encumbrances, liens, or other items affecting the title of the property.  Later, with the final title report, make certain that the title is clear and the escrow agent understands your requirements of taking title to the property.

4. Track Transaction Costs

In the end, escrow and title costs are combined with other transaction costs on federally authorized closing documents. Get a Good Faith Estimate to measure what these costs may be. Then compare these costs to the HUD-1 Settlement Statement, which is a final list of transaction and closing costs.  If there are noteworthy inconsistencies between the HUD-1 Settlement Statement and GFE, ask about them, because they may be open for disagreement.

5. Be Prepared on Closing Day

Come to the table only after fully reading and understanding your HUD-1 on closing day. Bring a paper and pen for taking notes and a good faith attitude. There’s a lot of time to back out if the deal does not follow contract guidelines.

Parties present at closing include these particulars:

• Seller
• Buyer
• Closing agent
• Real estate agent
• Attorneys for the seller, the buyer or both

The buyer will sign necessary documents and pay any escrow payments. The seller signs over closing statements and the deed and receives the money due.

Inland Empire Escrow pays very close attention to detail and goes through the whole escrow process very thoroughly and methodically.  With offices in Chino CA and San Bernardino CA, we quickly and professionally service all the surrounding cities such as Chino Hills, Ontario, Rancho Cucamonga, Upland, Riverside, Redlands, Colton, Grand Terrace, Yucaipa, and more.  When it comes to escrow services for residential, mobile home, short sale, REO, bulk / business sale, 1031 Exchange, or agricultural escrow, our escrow team is trained to walk you through all of these steps. If you have a question regarding any of these steps, please feel free to contact us. We are here to assist you. Contact us today at (800) 917-9387.