What Is Escrow?

When you are buying or selling a home there are loads of words thrown around that you have probably never used before. One of the words you will hear a lot of is ‘escrow.’ What exactly does ‘escrow’ mean and when is it used?

What It Means

Escrow is a legal term often used in the buying and selling of a home or property that describes the time when the property is in the hands of a third party like a bank or broker. When a property is in escrow that means the neutral party has custody of the property until the terms of the deal are met and the property is transferred to the buyer or back to the seller if the terms are not met.

The process of escrow is beneficial to the buyer because it is used to make sure the seller makes any agreed upon repairs or improvements before the deal can be finalized. For the seller it is beneficial because if the buyer pulls out of the deal against the contract they will keep the earnest money from their deposit (if there is one).

When You Will Hear It

You will hear all about escrow towards the end of the buying and selling process. The escrow agent comes in when the buyer and seller are ready to complete the transaction. The agent will hold custody of the property to ensure all the conditions of the deal are met before the transaction is made. 

Conclusion

There are a lot of complex terms and policies that come with the buying or selling of a home. The complexities of a process like escrow are why you need a qualified real estate expert on your side when you are buying or selling a home. Trying to learn the ins and outs of the legal process on your own will only result in errors and a considerable increase in stress.

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