5 Ways That Choosing the Wrong Escrow Company Can Hurt Your Real Estate Transaction

5 Ways That Choosing the Wrong Escrow Company Can Hurt Your Real Estate Transaction

5 Ways That Choosing the Wrong Escrow Company Can Hurt Your Real Estate TransactionAn escrow company serves as an independent third party in a real estate transaction, ensuring that both the buyer and seller meet a set of requirements before the transaction is finalized. In doing so, they ensure that both parties best interests are covered, making sure that the buyer has the money they need, and that the seller is selling property in good order.

Should both parties meet all the requirements in an escrow agreement, the money is released to the seller and the deed transferred to the buyer without any problems. However, there are instances where the escrow process isn’t smooth sailing, often at the fault of the escrow company rather than the buyer or seller.

Here are 5 ways that choosing the wrong escrow company hurt your real estate transaction:

Escrow Fraud

Unfortunately, there is an increasing number of escrow companies that are established for the sole purpose of escrow fraud. These are mostly online based and involve a fake escrow company pretending to be a legitimate business.

The process differs from each case but tends to involve a buyer being recommended the escrow company by a seller. Should the buyer fall for the trap, they’ll send over escrow money via wire transfer which is actually going into the hands of the seller.

A good escrow company protects you from the risks of escrow fraud that could see you lose huge amounts of money!

Higher Fees

Escrow companies often have a poor reputation for overcharging. Many add nonsense fees that are just an excuse to make more money from unsuspecting buyers and sellers, often costing hundreds or even thousands of dollars that could be avoided by choosing a reputable company.

It’s important to research different companies and understand the fees they charge. This lets you establish a good idea of what the real costs of the service are, letting you avoid companies that look like they are overcharging.

Slow Turnaround

Choosing the wrong escrow company can cause the escrow process to last much longer than it needs to. This is because not all escrow companies have the skills, experience, or motivation to complete the escrow arrangement in as short a time as possible.

With a good escrow company, you can expect a quick turnaround in what can otherwise be a long and draw out process. Dependable companies can significantly reduce the time closing the escrow arrangement, even when there are time constraints in place. Some can have a deal closed in a matter of hours rather than several days or even weeks!

Buyer Mistakes

A good escrow agent knows when to advise against common buyer mistakes that could possibly harm the real estate transaction. For example, if a buyer makes a large purchase during escrow (such as a vehicle) then it could be very damaging for their mortgage application.

They Are Not Really Independent

Despite being an independent third party in real estate transactions, not all escrow companies are as independent as they would have you believe. For instance, many escrow companies work with or are owned by real estate companies, meaning they won’t be as impartial as you might expect.

In these instances, the escrow company may favor the seller due to the relationship with the selling estate agent. This isn’t good news for the buyer and could seriously hurt the transaction from their side!

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.