“Escrow” is a term that comes up frequently when buying and selling property, or in transactions where large sums of money are involved. Simply put, escrow is when a third party (someone other than the buyer or the seller) holds and regulates payment until both sides are satisfied. This third party, usually an escrow company, is impartial to the transaction—they don’t favor the buyer or the seller. Instead, their job is to make sure both the buyer and the seller complete their sides of the transaction agreement, and are satisfied with the results. Using an escrow company helps protect the assets and interests of both sides.
Example: Suki is selling her house in Seattle to Ben. Suki and Ben come to an agreement on price, terms and any the conditions that need to be met for the sale (such as inspections and appraisal). A signed purchase and sale agreement is then delivered to an escrow officer, who keeps track of the contract and holds payment (such as earnest money) until the contract has been satisfied. Once both Suki and Ben have fulfilled their ends of the agreement, and they are both pleased with the results, the ownership of the Seattle home is then transferred or conveyed from Suki to Ben, and escrow closes, allowing payment to be completed.
There are several reputable escrow companies that can be found online or locally, but it’s often a good idea to ask your real estate agent who they recommend.
If you have a real estate related question please ask. I’m happy to help in anyway that I can.