What Is Escrow?

We are in escrow as commonly phrased by agents, in its simplest form means both the buyer and seller have mutually agreed on a sale price of the home, the EMA (Earnest Money Agreement or “agreement”) has been signed and now both parties move forward to the next stage of the sale (refer to my home buyers process chart pdf download for a general idea of timelines).

Technically “Title & Escrow” is a neutral third party whose responsibilities include but are not limited to the following:

* Hold both buyer and seller to the terms of the EMA
* Deposit and hold buyer’s earnest money
* Search for anything that would compromise a legal transfer of title
* Payoff any outstanding liens the seller may have on the home
* Coordinate transfer of funds needed to close
* Coordinate the signing by both parties to assure closing

It’s typical that the listing agent chooses the Escrow Company that both parties will be working with throughout the transaction, however, if I’m representing the buyer I will look for an angle to use mine instead. Why?

Every transaction has a “close date”.  Before escrow can coordinate the signatures needed to “fund and record” the sale, they must have the loan documents from the lender.  If a buyer is working with a “mediocre” lender chances are very likely that those documents will arrive barely in time or when it’s too late to close on time.  (Closing on time is crucial as there are times that a seller is looking for an opportunity for the sale to fail and may choose not to extend the closing date or maybe another sale is dependent on the closing of the existing one).  If Escrow is exceptional, they will be proactive in coordinating whatever it takes to close on time.  For instance, when those loan docs arrive at the last minute, a mediocre Escrow & Title company will schedule the signing for the next morning, an exceptional Escrow & Title company will hire a notary (at no cost) to gather the signatures at home or office, day or night to close on time.  There are many other reasons to work with an exceptional Escrow team, a quick example:

Example of Mediocre:

I was recently forced to work with a mediocre Escrow Company, I had to inquire repetitively for HOA regulations, asked them repeatedly about outstanding HOA assessments, provided the EMA twice that stated the seller was paying for those assessments, sent clear directions of the assessment amounts to be debited to the seller at closing….. when we arrived at the last scheduled minute to sign  (which proactive coordinating could have prevented) I was fortunate to have arrived early…. I wasn’t surprised to see that they had debited my buyer for the assessments and not the seller; we barely closed in time.

In summary, an exceptional Title & Escrow matters. For a more in depth summary of the services they provide please open the following PDFs:

What is Escrow (pdf download)

What is Title Insurance (pdf download)