The Life of An Escrow PART II
Congratulations! An accepted offer! But you don’t get the keys just yet! An accepted offer on a home is just the first step in the real estate transaction. Opening the escrow is the next. The following scenario illustrates a typical timeline of an escrow. Although it can vary from region to region, it’s standard operating procedure in Northern California for the escrow to be processed internally with the title company. Every sale varies, but a typical residential property escrow takes thirty days. This hypothetical timeline assumes a 30-day close with the Buyer obtaining a loan.
· Once an offer to buy the property has been accepted by the Seller and a Purchase Agreement Contract has been signed, the Buyer’s agent opens escrow.
· The Escrow holder begins preparing the Escrow Instructions reinstating price and terms of the offer, and other pertinent documents.
· Escrow is funded. A percentage of the down payment (referred to as the Earnest Money Deposit) is deposited into the escrow account by the Buyer’s real estate agent. This ensures the Buyer puts some skin in the game and demonstrates their seriousness about the purchase.
· Escrow orders a Preliminary Title Report.
· Escrow sends specific escrow instructions to the Seller including the grant deed to be notarized, tax forms, Statement of Information, and payment documentation, among others.
· Lender orders appraisal.
DAY 7 – 17
· With assistance from their agent, the Buyer orders any inspections and investigations of the property deemed necessary in order to do their due diligence discovering any issues requiring repair. The home must be available for the Buyer during this time period.
· Seller delivers all Disclosures to the Buyer. Disclosures provide information on known problems or defects of the property.
· Escrow requests payoff demands and clears any liens, if any, from the Preliminary Title Report.
· Buyer and Seller submit Statement of Identity to title to ensure clear title.
· Buyer verifies insurability.
· Lender receives appraisal report and sends Escrow loan approval.
· Following inspections, Buyer and Seller agree on any repairs to be completed or negotiate a credit based on the findings of their inspections.
· Buyer to remove all contingencies. (At this point, the Buyer cannot pull out of the deal without losing their deposit.)
· Buyer completes the final Verification of Property Condition making sure the home is in the same condition as when escrow was opened.
· Buyer signs all loan documents and sends back to the lender.
· Lender funds loan.
· Buyer deposits to Escrow remaining cash needed to close.
· Escrow receives authorization for recording the deed and sets up the file for recording.
· The sale is confirmed, the grant deed is recorded, paperwork is finalized and funds are distributed as appropriate.
· Escrow closed.
Now you get the keys! Congratulations to all!