The escrow period can occur during both the under-contract and closing portion of your transaction. You're about to learn what role the escrow period fills in your transaction and what you can expect for the escrow timeline. Ready?...
The Role of Escrow:
An escrow account is a tool for accountability on both sides of the transaction. Your down payment will be deposited into an escrow account and held for a period of time by an impartial third party, typically a settlement company. This arrangement helps ensure that both seller and buyer fulfill their obligations. Settlement companies will guide you on when and to whom you will hand over your down payment in order to secure the deed to your new home.
Once you've handed over the deposit check, it will be cashed. If everything goes smoothly and the sale proceeds, this money will be applied to the home's purchase price. Should the sale unexpectedly fall through, you might be entitled to a full refund of your deposit minus standard cancellation fees. In some cases, the seller could retain the deposit as liquidated damages. It's best to make sure you're clear on what your refund will look like before signing contract paperwork.
The Escrow Timeline:
The escrow period typically lasts around 30 days, but it can be shorter or longer. During this time, all the items outlined in the contract need to be completed to everyone's satisfaction. By the time you've started escrow, you and the seller have agreed upon the closing date and any contingencies. Every contract varies, but most include the following:
- Inspection Contingency: This should be done soon after signing the purchase contract. If the inspection results are unsatisfactory, it might lead to cancellation of the contract.
- Financing Contingency: After signing the contract, you have a window to secure funding. If, for any reason, you can't secure funding during this period (and the seller won't grant an extension), you must decide whether to remove the contingency or cancel the contract.
- Title Clarity: Ensure the seller provides a marketable title. Review the title report with an attorney or title officer to avoid any ownership-related legal issues. Be aware of local and state property transfer ordinances, and make sure you and/or the seller are in compliance.
- Homeowner's Insurance: You'll likely need this before the sale can close, especially with requirements like fire and earthquake insurance. Apply for insurance as soon as possible after signing the contract.
- Utilities and Final Walk-Through: Contact local utility companies to schedule turning-on services for the closing date. Also, don't forget the final walk-through inspection. Make sure the property matches the contract so there are no surprises.
Navigating a real estate transaction can be really tricky! There's a lot of paperwork, deadlines, and moving parts. We want you to have the smoothest transaction you can imagine. So, we built a transaction coordination team. They are in your transaction from the moment your offer gets accepted, ensuring that everything is signed and delivered on time.
If you are still confused about any portion of the home-buying process, your team at Story Real Estate can help. Even if you're just trying to learn about home buying and don't plan to buy any time soon. Just reach out! We love hearing from you.