An escrow service is a financial agreement whereby a third party gets to hold and regulate the payment of funds needed for two parties to do a given transaction.
It helps in making the transactions secure because the payment is kept in a secure account and is only released when the terms and conditions of the agreement are met.
Other than holding the funds for the said transaction, an escrow service company is also responsible for verifying all the transaction documents. It makes sure that all the established conditions by the two interested parties are met. Usually, escrows are established when there is a large sum of money that is going to be exchanged for products/goods. This is common in the real-estate business.
Buying a property may be a complicated process that most potential home owners don't understand fully. Tons of paper work is involved, and the process may be daunting. Normally, the lender or real estate agent takes care of hiring the escrow services. However, this doesn't mean that buyers shouldn't stay informed about the essential matters concerning such transactions.
It's not just about real estate business
Escrow services are not exclusively designed for a real estate business. You may rely on escrow services to purchase and sell other high-value items such as a plane or a boat. It's used in banking and law, and it's also utilized in corporate transactions whenever there are acquisitions and mergers. These services are also applicable to software.
Different payment options
Various forms of payment options are allowed, although the escrow service company highly determines this. Some options include PayPal, money orders, wire transfers, and credit cards. Note that some payment forms can have certain limitations.
An escrow agent isn't a lawyer
Do not treat an escrow agent as a lawyer. The agent can't and shouldn't provide information on how the deals are progressing or if transactions are being managed correctly.
What's an escrow period?
This is the time when the seller has accepted an offer to the time when the actual sale is closed. The escrow period generally lasts between 30-60 days when you make the payment in cash.
It's possible to shop for an agent
You can actually select an ideal escrow service instead of working with a company suggested to you by the real estate agent or lender. Essential things you must consider at this stage are the individual's level of experience, stability and financial strength of the company, and the cost of the escrow services. Fees will vary from one company to the next. So, be sure to conduct some comparison shopping:
- Get to know if it's the seller or buyer who pays the fees.
- Ask for a list containing all the costs.
- Be on the lookout for incidental fees such as wire transfer, courier, copying, and fax charges. The fees must be disclosed initially.
We hope that you found this information interesting, helpful, and useful in clarifying more about what escrow services are all about, including what they are not.