Partnerships in business are crucial, but especially so the relationship between a real estate agent and escrow agency should be mutually beneficial. When they work together, they can provide exceptional customer service to their clients and guide them through the closing process with greater transparency and peace of mind.
Whenever you create a new relationship, you create a network. This network gives you access to an increased number of potential sellers, buyers and investors. Establishing a partnership also gives you access to a product or service others may not have. The right company is an asset to your own business, as it saves you time so you can focus on giving your clients the exceptional service they have come to expect.
Developing a smooth and seamless process will give you a long list of satisfied clients. Having any partner is not enough; you must choose the right partner. Below are a few things to consider when you begin the search for an escrow company to become your next partner.
What Is an Escrow Agent?
An escrow agent typically gets involved in a real estate transaction once a seller accepts an offer for a property from a buyer. Their job continues until that entire transaction is completed. An escrow agent is a third-party officer whose overall job is to hold onto the money and assets involved in a transaction until the buyer and the seller complete their obligations as written in a contract. The escrow agent themselves is also under the contract that protects both parties and has the best interest for both parties involved.
What Does an Escrow Agent Do?
Essentially, once the buyer and the seller sign a purchase agreement, an escrow agent is needed and escrow begins. Then, money is transferred into the escrow account and the agent works to ensure everything is completed between both parties prior to closing. Escrow agents do more than just to keep track of money and assets though; they also help make sure additional factors of the transaction are being met such as contingencies or any necessary documentation. Some types of documentation escrow agents handle are the transfer of ownership of the property, and any documentation between the seller and the buyer that involves selling the home.
Escrow agents typically work for title companies, mortgage lenders or credit unions. During a home’s closing process the escrow agent is responsible for processing any necessary paperwork, witnessing the document signings and explaining the companies’ services to prospective home buyers. The primary function of the escrow agent, however, is to establish escrow accounts for home buyers and to maintain the funds and records of such accounts. Because of the nature of escrow proceedings, many officers have knowledge of both finance and real estate.
Why Do Buyers and Sellers Need Escrow?
When a home sale transaction occurs, buyers will need to deposit money into an escrow account. The money is kept safe, and sellers cannot access it until the home sale is final.
The purpose of escrow is to protect buyers and sellers who are involved with the process of, well, buying and selling a home. Here’s why:
For the Buyer. When buying a home, you want to ensure that your investment is protected. In a real estate transaction, the escrow agent is a neutral third party who holds and safeguards the deposit money until all the conditions of sale are met. Once that money is deposited into escrow, it is typically non-refundable (unless both parties agree to cancel the transaction). This protects buyers if the seller backs out of the deal or fails to meet other agreed-upon conditions, such as making necessary repairs before closing.
For the Seller. As a seller, you do not get the money the buyer put down, but it still benefits you. By forcing the buyer to put down a deposit, which is usually 3% of the sales price, you make them responsible for buying the home. In other words, they cannot go out and put bids on several other properties, unless of course they have money to throw out the window. Once the buyer puts the money down, they are tied to that home and required to meet the contractual obligations. If they do not, they risks losing their money. The seller would then receive the money and be able to market the home to other buyers.
Things to Look for in an Escrow Partner
Building and maintaining a working relationship benefits everyone involved in the transaction. As you choose an escrow agency to partner with, consider these factors:
Location, Location, Location
Just as the right location is integral to the home sales process, it is worth considering where the escrow partner’s office is located. After all, you’ll probably travel there to confer with the escrow agent, sign papers, deliver or pick up a check, etc. An escrow company that is conveniently located near your residence or where you work can save a lot of time over the long run.
Cost Structure
No one wants to pay more than they have to at closing. You do not want to sit across from a surprised seller or buyer who is asked to pay more than expected. This is why choosing an escrow agency with a transparent cost structure is essential.
The escrow company should give sellers and buyers an estimate of closing costs so they know what to expect. They also should have representatives willing to answer clients’ questions at any stage in the process and explain the fees they see on the closing statement. This helps your clients make the decisions that best fit their needs.
Experts on Staff
Everyone wants to work with the best of the best. Knowing which title company has the highest level of expertise may take some time on your part. However, you will likely enjoy a quick pay off once you have found them and can put a partnership in place. You will know that your clients will have high-level experts working for them. Any issues will be identified and addressed quickly. Important details will not be overlooked leaving a potential risk for your client. This will ensure there are no issues when you finally get to the closing table. Your professional reputation will be protected and boosted by aligning with these experts.
Experience and Resources
At the very least, you want an escrow partner who has substantial experience in this field. It is recommended that you review any potential partner’s experience and make sure there is a good personality fit with your escrow team. Beyond that, it is important to learn whether or not they have the resources to meet your specific needs. The most qualified escrow partner will use technology to make things easier for you, including:
- E-Signatures – Sending documents to you via email with the option of using a digital signature.
- Digital Storage – Using a paperless system for quick and easy access to information in your file.
- Security & Cloud Technology – Servers and files stored in the cloud and monitored around the clock by a qualified data security provider.
Quality Customer Service Skills
Some experts have an incredible depth of knowledge but do not have the skills to communicate effectively. When people are paying for a service, they like to feel like they are being well taken care of. It is equally essential for a potential title company to have excellent customer service skills as it is expertise.
Value Added
The escrow agency should augment and add value to your work. Pay close attention to how they do business. Look for an escrow company that streamlines processes to save you and your clients time and money. Do they offer paperless closing services or e-sign documents to simplify the process of submitting and tracking documents related to the closing so you do not have to stop by the post office or find time to send faxes? Having all of the closing documents in a single place makes it easier for you and your clients to see exactly where they are in the closing process and what they need to do next.
Services Offered
As a real estate agency, you want your clients to have a positive experience throughout the entire purchase process — and even after the seller hands over the keys. One question that can help determine the value an escrow agency adds to your business is what kind of products it offers.
Your real estate business may focus solely on residential or commercial properties. In the future, you may decide to expand your offerings into another space. Choosing a company that can do residential, commercial, new construction and other add-on services will allow for a long relationship that can grow with you.
Do You Like Them?
Relationships are tricky. You may have found a company that checks all the boxes. They have the best resources, their customer service skills are fantastic, and they have plenty to offer. But like any relationship in life, what happens when you meet them determines your future partnership? Perhaps you do not have personalities that align, or you have different goals for your business. To some people, liking a person or company is a requirement to work with one another. Others look at business as simply business. You do not have to like a person to do good business together.
Having business partnerships will make your life easier. It will also allow you to grow your business in conjunction with your partner.
Bottom Line
Finding a reliable, honest title and escrow partner can be challenging. As you have probably discovered, the type of services offered and the level of customer satisfaction can differ drastically across companies.
In the fast-paced world of real estate, the services you get (or do not get) can often mean the difference between closing on time or having things drag out, resulting in lost money or frustrated clients.
Because choosing the wrong title and escrow company can be an expensive proposition for lenders, here are four key questions you should always ask when evaluating a title and escrow partner.
As you evaluate different escrow and titles companies, keep in mind that a great escrow partner is always committed to providing the right technologies, service levels, and resources for their customers.