The close of escrow is a critical final step in the real estate transaction process. Here’s how it works:
Offer and Acceptance
The process begins when the buyer makes an offer on a property and the seller accepts it. This agreement outlines the terms of the sale, including the purchase price and any conditions that need to be met.
Escrow Account
Once the offer is accepted, an escrow account is established. This is a neutral third-party account where funds related to the sale, such as the buyer’s earnest money deposit, are held securely. The escrow agent, often a title company or attorney, manages this account.
Due Diligence
During the escrow period, both parties perform due diligence. The buyer typically conducts a home inspection, secures financing, and reviews any disclosures provided by the seller. The seller works to satisfy any contingencies outlined in the purchase agreement.
Title Search and Insurance
A title search is conducted to ensure there are no liens or claims against the property. Title insurance is purchased to protect the buyer and lender against potential future disputes over property ownership.
Final Walkthrough and Closing Disclosure
Before closing, the buyer usually performs a final walkthrough to ensure the property is in the agreed-upon condition. The buyer also receives a Closing Disclosure, which outlines the final terms of the loan and the costs involved in the transaction.
Closing
The close of escrow involves signing the final paperwork, including the deed, loan documents, and settlement statement. The buyer transfers the remaining funds to the escrow account, and the escrow agent disburses the funds to the seller and other parties as necessary.
Transfer of Ownership
Once all documents are signed and funds are distributed, the title is recorded with the local government, officially transferring ownership to the buyer. The keys to the property are handed over, completing the transaction. 🔑
The close of escrow signifies the end of the buying process, making the buyer the official new owner of the property. 🍾