Understanding The Escrow Process
By Kurt Real Estate Nov 23, 2019
Whether you’re buying or selling a home, the escrow process is inevitable. For most, the excitement of sealing the deal is overshadowed by the fright of those 45 days (the average escrow in Orange County).
Escrow can feel a bit overwhelming and, if not properly prepared, you may even feel somewhat blind-sighted by the issues that may arise. It’s best to have a general understanding of the overall process and what is needed to make an escrow go smoothly and close on time.
1. You’ll receive an introduction from the TC (transaction coordinator) that will be handling all documentation needed throughout escrow. The TC communicates with the escrow officer and will send you loads of info and documents to sign, so be patient and, if you have any questions, ask your agent. The TC cannot advise you in any way.
2. Receiving preliminary title. This will be emailed (or, in some cases, mailed) to you by the escrow officer. It asks for and contains very sensitive personal information so it is best that, upon completion, you hand deliver to the escrow officer, if possible.
3. Home inspection. This is almost always a necessary step in the escrow process. The home inspector will check every nook and cranny to ensure everything is in good working condition and there are no serious issues such as water damage, leaks, foundational issues, etc. Typically, the only time an inspection would not be needed is if the buyer intends to tear down and rebuild.
4. Appraisal. Again, in most cases, this is an essential part of escrow. The appraiser will take measurements of your house and use his/her evaluation in conjunction with the comps to determine its value. The only time the appraisal poses a problem is when the house is overpriced or sells above asking without competing offers to justify the price.
5. Termite Inspection. Sometimes a buyer will request a termite inspection/clearance. If your property is located in a community with an HOA, the termite inspection will usually need to be done by the HOA-approved termite company. Your agent will arrange this. In some cases, other inspections may be requested by the buyers which is written into the purchase agreement so you will know about these upfront.
6. Repair Request. Following the home inspection, the buyers will submit a repair request with any items that appeared on the inspection report they would like fixed beforehand. It is important to note that in signing a purchase agreement, the buyers agree to buying a property as is in regards to cosmetic matters. Anything that would be considered a “remodel” should not be requested. Other issues such as cracks, leaks, missing carbon monoxide detectors, broken A/C etc. can and should be requested by the buyers. Keep in mind, everything in a transaction is negotiable – that includes repairs. So, as a seller, you can counter some of the buyers requests if any seem unreasonable.
7. Closing Package. The escrow officer will prepare the settlement statement and include in the closing package for final signing. By now, you’ve made it through any and all issues that may have arisen and you’re ready to sell your home. Escrow will send loan docs to the lender for review and approval and, once approved, the title company will record the documents and escrow will receive the wire transfer of funds from the lender.
* Be cautious of wire fraud. Wiring instructions should never be sent unencrypted and should always be confirmed in person or over the phone.
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