For a new homebuyer or seller, words like “escrow” can sound scary. We have likely all heard the word, but the whole concept can seem overwhelming and foreign. That is why it is so important to understand the concept and to choose the best escrow services to fit your needs. Real estate agents can also benefit greatly from an experienced escrow company. The closing process will be smoother, which means a less stressful time for all parties involved.
Choosing the right escrow company may take a bit of time and research, but the results can mean the difference between a smooth process and a stressful one full of delays and mistakes. Choosing the wrong company can mean a lot of uncertainty about how your money and property are being handled, which can lead to unnecessary stress.
Here are some great escrow tips on how to choose the right escrow company for you!
Defining Escrow
Escrow is a legal concept that occurs when a third party holds onto funds during a transaction. In real estate, it is often used to protect the buyers and the sellers during the purchase process. After a property is purchased, the new owner continues to deposit money into Escrow as a means of paying mortgage and insurance.
Escrow guarantees the sellers that the buyers have the funds needed for the purchase and that all the money will be handed over after the title is transferred. It also protects the buyers from scams by deceitful sellers who might hold no claim to a title. Eventually, Escrow helps to build trust in high-stake transactions where neither party is familiar with the other and where they both have a lot to lose.
What Is the Role of an Escrow Company?
The ultimate role of an escrow company is to facilitate a transaction and make sure that everything is done as expediently as possible. There are many moving parts to any transaction, but the role of an escrow company can be boiled down to three segments:
- Holding the funds or assets of the buyer and the seller
- Ensuring that the seller does not receive funds until the conditions of the transaction are met
- Ensuring that the buyer does not receive the rights to a property or any other assets that are being sold until the conditions of the transaction are met
Who Chooses the Escrow?
Choosing an Escrow agent is the role of both parties involved in the sale and purchase of the real estate. Both parties agree on the company that will hold onto their assets until every condition is met. It is essential to choose an agent who can work in a fairly straightforward manner.
How to Choose the Right Escrow Company
In real estate, choosing the right Escrow agent is essential because they will be with you throughout the transaction process. Therefore, you must trust the agent you choose to meet deadlines, follow instructions, protect your assets and do other essential things.
Whether you are about to embark on your first real estate transaction or your hundredth, it is crucial to pick a company with a good reputation. You should do the due diligence to find a highly rated agent with great reviews is recommended by others and works within ethical boundaries. In addition, it is vital to choose a company with adequate resources and a team with years of experience. This ensures that all your needs will be met, and you will have an entire team to address your concerns when need be.
You may feel rather lost about how to choose an escrow company – but do not worry! Choosing the right team is actually rather simple as long as you consider some essential variables.
- Reputation
When picking an escrow company, do not just go with the first name that pops up in a web search. Pick a company that is well established and comes highly recommended. A little research will go a long way to giving you peace of mind about choosing an escrow company that you will be able to rely on. One easy and effective way to research about a company’s reputation is by reading customer reviews on different websites. Current and past clients are usually very honest about their experience. After reading a good amount of reviews, you will have a good idea of the reputation of different escrow companies.
Trust in your escrow company is of the utmost importance because they are going to be handling lots of important documents and funds during your real estate transaction. You will need a detail-oriented staff that will always treat you as a high priority.
- Resources and Experience
You should choose an escrow company that has many resources and a staff with years of experience. To research this, you can call the office to ask whatever questions you have.
You can ask them to tell you about their experience in this field along with any questions you can think of to determine if they meet your standards in a company.
- Specialization
As we have mentioned, most escrow companies deal in real estate transactions. But “real estate transaction” can refer to a lot of different things. Are you selling your house without a realtor? Maybe you are refinancing your mortgage? Or are you looking to buy investment real estate? All of these transactions are different and require different escrow services, so search for a company that can meet your needs.
- Communication Styles
Does the company’s communication style match your own? Most people value responsiveness and promptness when it comes to communicating with clients. The escrow company you choose should have a similar communication style as yourself. You should look for a company that is quick to respond, presents information clearly, is straightforward, and is transparent.
Companies that have these communication characteristics are usually a better choice than those who deliver vague information and slow response times.
- Location, Location, Location
Real estate agents often stress the importance of location when purchasing any kind of property, but did you know that the location of your escrow agent is also really important? Choose an escrow company that serves the region in which you would like to conduct your real estate transaction. That will ensure your escrow agent will be familiar and comfortable with all the real estate nuances that are unique to that particular area, which can be incredibly helpful.
- Compare Prices
Money can become very tight very quickly when buying and selling a house, so make sure you ask about pricing when considering an escrow company. Any escrow company that is upfront about costs will be helpful before, during and after your real estate transaction. Ask about the costs associated with the actual real estate transaction, escrow service fees, title insurance and other fees.
Escrow Tips for Real Estate Agents
You may be wondering what are the tips and tricks that you need to know about escrow as a real estate agent, and how to pass this information to clients. Whether you are a seasoned pro or just starting your real estate journey, it never hurts to learn useful tips to ensure a smooth closing for your clients.
A real estate agent’s job differs from an escrow agent in many ways. While escrow’s focus is on centralizing and protecting all transaction details, real estate agents focus on advising buyers and sellers on a property. As a real estate agent, you will act as middlemen between buyer and seller. They are experts in marketing properties to sell them at the best possible price. Furthermore, they look for properties that meet their client’s needs to buy at the best possible price with the best possible terms & conditions.
A key part of a real estate agent’s job is to negotiate between the two parties. Once an agreement is reached and put into a contract, an escrow comes into play to ensure a safe and smooth transaction. Real estate agents take home a percentage of the final selling price.
You should understand the importance of referrals from other realtors about escrow companies they have worked with. Referrals are a way to ensure that you are getting recommendations for escrow companies that have been used from others and have provided quality service to other agents, buyers and sellers.
Make sure that when you are getting referrals they are from realtors who have been in the business for a long time and that have been trusted by many. These individuals understand the challenges associated with the business and may be able to point you in the direction of a company or two that does it right.
Also be sure to focus on communication. Escrow can be a stressful and confusing experience for buyers and sellers (and you too). You will want to work with an escrow company that values time, transparency and convenience.
A buyer or seller wants to know what is going on with their money or property. A company that keeps them updated on where they are at in one of the biggest transactions of a lifetime will go a long way to keeping stress levels low.
Last but not least, technology is something to consider. Escrow has been done the same way for generations, and the time for a change is now. Look for an escrow company that offers tools and technology that support digital escrow as a viable option.