For Sale by Owner News and Articles
Setting Up Escrow
Setting up or "opening escrow" involves simply visiting the office of the escrow or title company which you have selected and handing over the deposit monies and giving instructions for the transaction. That is all there is to opening escrow. It is something anyone who’s involved in the transaction may do - the buyer, the seller, the lender, or the real estate agent. It doesn’t matter who opens the escrow just so long as those involved in the transaction have designated someone to do it when they sign the final purchase agreement. If there is no real estate agent involved, the seller will typically be the one to start the escrow process, as she will be holding a deposit or good faith check from the buyer, together with the signed purchase agreement. In for sale-by-owner transactions, the buyer and the seller may both open escrow.
To open escrow, you will need to provide the escrow or closing agent with the following information:
Purchase price, address and description of the property (this will all be contained in the purchase agreement)
Seller’s name and address
Buyer’s name and address
Parties to whom the preliminary title report or the abstract of title are to be sent (generally they are the buyer, seller and lender).
Termite report information (who will do the inspection)
Amount of deposit to be held in escrow
Insurance agent for the buyer
Any personal property involved in the sale
Rent, if any
Projected closing date
Your escrow officer or title attorney must have all of this information available to prepare your escrow instructions properly. If all the information is not available at the time you open escrow, you can provide it as soon as possible. The better informed he is, the faster he can process your purchase or sale.
Once your information has been received, your escrow officer will assign your file an escrow number. It is a good idea to try to always refer to this number when calling for information or status reports. Your escrow officer will deposit the earnest money into a separate escrow account and order the title search to be made. Both buyer and seller will receive a copy of this report. If there is a lender involved in the transaction, he will see to it that the lender also receives a copy of the title report. He will work hand-in-hand with the lender, incorporating any loan fees, prepaid and pro-rata interest into the escrow instructions. The buyer will normally sign his loan documents together with his escrow instructions and the seller will normally sign the grant or warranty deed together with her escrow instructions. The lender and your escrow or closing officer will coordinate the simultaneous exchange of loan funds with the closing date of escrow, together with the disbursement of the sale proceeds to the seller.
Sandy Gadow is the author of All About Escrows and Real Estate Closings published by Escrow Publishing Company. A prominent authority on title and escrow, Sandy is also a licensed mortgage broker and member of the California Escrow Association and American Escrow.
The information is designed to provide accurate and authoritative information in regard to the subject matter covered. It is printed with the understanding that the author is not engaged in rendering legal or accounting service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.