Who Opens Escrow: The Buyer or the Seller?
Discover who typically initiates escrow in real estate transactions and the essential steps to begin a secure property sale.
Escrow acts as a neutral third party, safeguarding funds and documents until all terms of a sale are met. This mechanism offers a layer of protection for both buyers and sellers, ensuring a secure and streamlined process.
Who Initiates Escrow
Either the buyer or seller can initiate escrow, but the buyer’s real estate agent most commonly contacts an escrow or title company that offers escrow services. The selection of the escrow company is a negotiable term, formally documented in the purchase agreement.
Information Required to Open Escrow
To prepare for the opening of an escrow account, specific information and documentation are gathered from both the buyer and the seller. The fully executed purchase agreement stands as the most important document, outlining the agreed-upon terms of the sale. Both parties must provide complete contact information, including full names, current addresses, phone numbers, and email addresses.
Details about the property, such as its physical address and legal description, are also necessary for proper identification. Information regarding the earnest money deposit, including the amount and how it will be delivered, is required for the initial setup. For buyers utilizing financing, details about the lender are required to facilitate communication and coordination. Any specific instructions or contingencies stipulated in the purchase agreement that are relevant to the initial establishment of escrow must also be provided. Furthermore, contact details for all real estate agents involved in the transaction are typically collected to ensure clear lines of communication.
The Steps to Open Escrow
Once all the necessary information and documentation have been gathered, the formal steps to open the escrow account begin. The initial action involves the submission of the fully executed purchase agreement and all other gathered information to the chosen escrow or title company. Following this, the earnest money deposit is delivered to the escrow holder, signifying the buyer’s commitment to the transaction.
The assigned escrow officer then undertakes an initial review of the purchase agreement to understand the terms and conditions of the sale. Upon this review, the escrow account is officially opened, and a unique escrow number is assigned to the transaction for easy identification and tracking. Subsequently, the escrow officer prepares and issues initial escrow instructions to both the buyer and the seller. These instructions outline the responsibilities and requirements for each party, which they review and sign to acknowledge their understanding and agreement.
The Escrow Period
After escrow is officially opened, the escrow holder assumes a central role in managing the transaction until closing. This neutral third party is responsible for holding and managing all funds and documents throughout the real estate process. The escrow holder coordinates extensively with various parties, including lenders, title companies, and real estate agents, to ensure all conditions are met.
During this period, the escrow holder oversees the handling of all contingencies, such as property inspections, appraisals, and the buyer’s loan approval. They also play a role in the preparation of all necessary closing documents, ensuring their accuracy and legal compliance. The culmination of the escrow period involves the final signing of documents by all parties and the precise disbursement of funds at the time of closing.