These 5 Escrow Steps Are the Most Important in a Real Estate Transaction

Real estate transactions can be an overwhelming process, particularly for new buyers. This is because there are many requirements to fulfill and there are a lot of steps involved in the escrow process alone. However, some of the steps are more important than others and knowing what to expect can help you close the deal in a fast and efficient manner.

Following are the 5 escrow steps that are the most important in a real estate transaction:

1. Deciding the Terms of Escrow Contract
Deciding on the terms of the escrow agreement is the first and the most important step in the real estate transaction process. Both parties must come together at this step to organize the various aspects of escrow, e.g. identifying sources of capital, appointing an escrow agent, identifying the different terms and conditions, etc. This is generally a complex, long process with different representatives present for both buyer and seller.

2. Appointing an Escrow Agent
Although appointing an escrow agent is not a legal requirement, this step is still very important as it can help make the entire real estate transaction process go smoothly. Both parties must simply agree on a qualified and experienced escrow agent.

3. Entering the Escrow Transaction
Entering the escrow transaction is the next most important escrow step. As soon as all the required documents are in order, the escrow agent starts this process. Before escrow officially opens, it is very important to get all the required details such as policy liability amounts, property address, total cost of sale, and contract details for professional representation (e.g. lender, estate agent, attorney, etc.).

4. Signing Authority
This an important escrow step that is only required in case of a commercial real estate transaction. Since commercial real estate transactions require a complex process, the transaction typically occurs between legal entities instead of single parties, which helps to reduce limit liabilities and costs. There can even be more than one legal entity created to own the commercial property and each of them must have a person with a signing authority. Without verified signing authority, it is not possible to release escrow funds. That’s why this step is very important.

5. Title Report and Closing Documents
Providing the final closing documents and accepting the final title report are the final key escrow steps of a real estate transaction. These steps can vary from one real estate transaction to another, but usually involve zoning warranties, environmental reports, deeds, and anything else agreed in the escrow agreement that must be finalized. The title report is provided ahead of time. Still, buyer has limited time to review it and in case of any objections, seller has limited time to respond.

Once the final title report is accepted by both parties, the transfer deed is complete, and the remaining closing documents are filed, escrow funds are released and the real estate transaction is completed.

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.