What 5 Things Should a Real Estate Agent Always Tell Their Buyers About the Escrow Process

What 5 Things Should a Real Estate Agent Always Tell Their Buyers About the Escrow Process

what-5-things-should-a-real-estate-agent-always-tell-their-buyers-about-the-escrow-processThe escrow process may seem rather daunting – especially for first-time buyers – but a good real estate agent should make things easier. Becoming a homeowner is no easy feat, and even once you enter the escrow process there is a still a lot of work to be done to complete the sale, so having a reliable real estate agent is always recommended.

A quality real estate agent should be clear and concise about the various aspects of escrow, allowing you to clearly understand what is still required of you through the various stages of escrow. Here are 5 things that a real estate agent should always tell their buyers about the escrow process:

1. Buyers must have homeowners insurance to end escrow

Homeowners insurance is necessary for any buyer looking to conclude escrow. This insurance must be purchased during escrow, as there is no way for the process to end until the buyer has some form of homeowners insurance.

2. The mortgage provider needs to be informed that you have entered escrow

Once the escrow process has officially begun, the buyer must inform their loan provider. To do this, simply contact the lender to tell them, after which they may require an official copy of the escrow contract to verify this before beginning the appraisal of the property.

3. Help the buyer understand the escrow instructions

Escrow instructions feature a range of documents that must be reviewed and signed by the buyers, so a good real estate agent should help clarify what is needed from the buyers. In most cases, escrow instructions include preliminary reports and a final report that includes title insurance.

The preliminary report should be reviewed to ensure the property is actually as-described, as well as identifying any liens, easements, encroachments or encumbrances.

4. Clear Contingencies

There are various contingencies available in contracts between buyers and sellers, and when included these must be met in order for the contract to become official. These contingencies allow buyers to anticipate potential issues surrounding the property, protecting both the buyer and seller from various issues that may arise during the escrow process.

The most common contingencies include appraisal, financing, and inspection, so any one of these must be dealt with before the sale can be completed.

For instance, financing contingencies protect the buyer by ensuring the sale is only final providing they get the pre-stated financing, be it a certain type of mortgage or securing a specific interest rate before escrow closes – should this not be met, then the buyer can back out of the deal without losing their deposit.

Contingencies can also be specific issues relating to the individual property, and each one included in the contract must cleared, after which they are removed from the contract in writing. A real estate agent should inform you of all and any contingencies in the contract, and what must be arranged to complete them.

5. Most buyers require a home inspection contingency

Of all contingencies featured in the contract, almost all of them include a home inspection contingency, although there are some instances where it’s not needed. However, those that do feature a home inspection contingency require the buyer to arrange for a home inspection, so your real estate agent should be able to clarify this for you.

Different contracts have different lengths of contingency periods, ranging from a few days to several weeks, although this will be negotiated before entering escrow, and there are various inspections available, ranging from general home inspections to secondary inspections.

Although most inspections reveal the home is safe to buy, there are occasions where they identify issues with the home. This can be used as a leverage in negotiations or as a sign that the home shouldn’t be purchased.

Inland Empire Escrow  provides escrow services for a diverse variety of real estate transactions.  With offices in Chino CA and San Bernardino CA, we quickly and professionally service all the surrounding cities such as Chino Hills, Ontario, Rancho Cucamonga, Upland, Riverside, Redlands, Colton, Grand Terrace, Yucaipa, and more.  To hear more about our escrow services for residential, mobile home, short sale, REO, bulk/business sale, 1031 Exchange, or agricultural escrow, contact us today at (800) 917-9387.