You made it to the finish line! Once all the steps have been completed, the buyer’s loan has funded and you have received confirmation that the grant deed has been recorded; the seller will receive a final settlement statement from escrow that breaks down your selling costs – usually within a day of closing. These costs are deducted from the purchase price, and you will find your net proceeds at the bottom of the page.
But you might be wondering what you can expect now.
What is Escrow?
Escrow is an arrangement in which transacting parties retain an escrow agent as a third party. The escrow agent’s job is to safeguard funds and assets according to conditions that have been agreed upon in advance. Such an arrangement protects the transacting parties in the deal, providing that neither has an unfair advantage and that both are earnest about the deal.
In the event that the terms of the agreement are not adhered to, it is generally easier to reverse the escrow and make the parties whole than it would be if the parties were merely contracting directly with one another. Take the simple example of a buyer placing money into an escrow account as a gesture of good faith regarding a transaction. If the conditions set forth in the escrow agreement not be met by the seller, it is easy to refund the deposit back to the buyer. Similarly, should the buyer default under the terms of the agreement, the seller would have access to the deposited funds.
What Is the Closing?
Closing a real estate sale is similar to closing the escrow. It simply means that the deal is completed and both parties have come to an agreement as to the selling price of the home and conditions of the sale.
Most likely, the sales contract contains a closing date, which is when the final papers are signed and is the date the buyer becomes the owner of the home. For the closing to proceed, all issues regarding matters such as financing and insurance will need to have already been resolved.
This does not necessarily mean that the buyer can you move into the house on the closing date. The sales contract should state when the seller is to move out and the buyer is to take possession of the property. In most cases, the buyer takes possession at closing, but the parties can also negotiate alternative conditions, such as the seller remaining in the home for a period of time. This is typically the case if the seller is waiting to close on another home purchase or complete the construction of a new home.
Protections for the buyer may also be reflected in an escrow arrangement, such as money being held in escrow to be paid to the buyer if the seller remains in the home longer than agreed.
What You Need to Know:
The buyer and their agent will be required to attend the closing to review and sign the packet of financing paperwork.
If You Are the Seller:
- Closing day is payday, and in most cases, you will be able to collect your home sale profit as soon as the ink dries on the final documents.
- Pick a Monday through Thursday closing date during local banking hours for the speediest payment. If you close on a Friday, and you may have to wait until Monday to receive payment.
- The fastest and simplest way to receive your funds is with a paper check. Alternatively you can opt for a wire transfer within 24 hours of closing.
- The check should reflect your net proceeds, or the total amount you take away from selling the home after accounting for your mortgage payoff, fees, and taxes as outlined in your seller’s settlement statement.
- You will receive your funds from the escrow or title company involved in the closing.
- Be sure to properly store the documents from your escrow transaction, especially the final closing statement. This document contains important information which you will need for preparation of your tax return.
- If you paid off existing loans or other liens, you may receive documents which confirm these payments. Keep these in a safe place in case they are needed for future reference.
If You Are the Buyer:
- You will receive your Policy of Title Insurance by mail directly from the title insurance company. This important document gives you the assurance that your property is vested in your name and that it is free of any defects or liens (except those approved by you).
- Retain your final closing statement in a secure place. You may need it for tax preparation purposes.
- You will receive the original recorded Grant Deed by mail directly from the County Recorder.
- If you obtained new financing, you should receive payment information from your Lender. Contact the lender if you do not receive any communication before your first payment is due.
Reminders For Both Seller and Buyer:
- Real property tax bills are mailed in late October of each year. Remember the first installment must be paid by December 10 and the second installment must be paid by April 10. If you need a copy of the tax bill, contact the Assessor early to avoid late penalties on your tax payments.
- If you have not already done so, provide your Escrow Officer with your correct post-closing mailing address.
Escrow provides assurances for all major parties in a real estate transaction—the buyer, the seller, and the lender—that their interests, and their funds, are protected. Your escrow agent will track and verify the transfer of key variables such as the transfer of the property title from the seller to the buyer and the transfer of funds from the buyer to the seller. It also helps assure the lender that the loan money is going to the right place.
As a buyer, it can be intimidating to transfer thousands of dollars to a seller you have never met, or have met once, without knowing for sure that you would receive the title in return. And as a seller, it can feel risky handing over a title without a complete guarantee that the buyer is good for the purchase price. Escrow protections help give all parties peace of mind, and help ensure that a real estate transaction goes through as easily as possible.
How Buyers are Protected:
Buyers find protection in the fact that any repairs or problems found during the home inspection will need to be fixed before the seller receives the money for the purchase. The escrow process ensures that all conditions are met and that the deposit is safely stored without fear of a break in the agreed upon contract.
How Sellers are Protected:
Buyers find protection in the fact when buyers back out with no legitimate reason, they forfeit that money to the seller—a decent consolation for the sale’s failure and the expense of making mortgage payments and other expenses while the home was off the market.
What Happens at Citrus Heritage Escrow?
During the escrow period, our title department begins researching and examining all historical records pertaining to the subject property. Barring any unusual circumstances, a commitment for title insurance is issued, indicating a clear title or listing any items which must be cleared prior to closing. The commitment is sent to you for review.
Your escrow officer follows instructions on your contract, coordinates deadlines, and gathers all necessary paperwork. For example, written requests for payoff information (called “demands”) are sent to the Seller’s mortgage company and any other lien holders.
When choosing an escrow company there can be many important factors to evaluate. Fees, location, staff and even recommendations from friends and colleagues are all things to consider. With Citrus Heritage Escrow by your side, you can rest assured that when you receive your settlement check, you’ve gained the maximum benefit from your home sale or purchase.
Call us today with any questions or concerns. Our professional Escrow Agents will help you through this exciting yet confusing process. (951) 335-7200