One of the most confusing processes for the uninitiated to go through can be buying of a home. At times it may seem that people are speaking a different language than they have ever heard before.
This situation too often leaves a home buyer having to take on blind faith that the brokers, attorneys, escrow agents, inspectors and mortgage agents know what they are doing and acting in the buyers best interest.
The Las Vegas real estate agents at Lori Ballen Team don’t want their clients to ever feel like they are in the dark.
Here is a very short course to help spread a little light on the escrow process.
What Does Escrow Mean?
The escrow or closing process actually begins once the buyer and the seller have agreed on a price and all the conditions for the sale. At the same time that the sales agreement is signed your Las Vegas real estate agent will collect an agreed upon percentage of the sale price from you and deposit it into an escrow account with an escrow agent.
This known as earnest money and as the name implies it is to show that you are earnest in your desire to buy the property. Think of it as a deposit.
What is an Escrow Agent
An escrow agent is a neutral third party who actually handles all of the funds and documents associated with the buying and selling of the property.
Not being a party to the sale, in any way, their function is to make sure that all parts of the sale are executed in an equitable and legal manner. Like a referee or umpire the make sure the rules are followed and that everyone plays fair.
Steps of the Escrow Process
1. Entering Escrow- Set the sells conditions, sign the sells agreement, open an escrow account and deposit earnest money.
2. Bank Appraisal– You should be pre-approved before you start looking for a home. Still, the bank is going to want their own, independent appraisal to assure the property value will cover the loan amount. Note: The home buyer usually pays for this and if the property cannot be sufficiently financed sale is canceled and earnest money returned.
3. Estimate of Costs – Once financing is approved you will be given an estimate detailing all of your finances (interest rate, closing costs, inspection fees, etc.) associated with the sale.
Some other inspections you may consider or be required to have are pest inspection, environmental inspection.
5. Acquire Homeowners Insurance– This is a condition of any mortgage but you don’t have to use their recommended insurance company. Shop around to find your best deal and coverage.
6. Receive Title Report and Title Insurance– These assure you that no one else other than the seller has any claim on the property. In real estate parlance, that the property is unencumbered.
7. Final Walk-Through– One last look around the property.
8. Review Costs – This is the final detailed report of all costs associated with the purchase. Check it closely against the estimated costs to make sure that no mistakes have been made or added cost tacked on.
9. Closing– The last step. Where all the money and final paperwork gets taken care of. Be prepared to spend half a day signing your name and reviewing documents.