The escrow process begins once the offer is accepted. Remember that the title company is an independent third-party company selected by the parties to provide the title insurance and escrow process to successfully transfer title from the seller to the buyer. The title company is a mandated third-party company that researches a property, studies how a title is held, and insures the title against title problems so that the property can be sold with a clean title. The title company works equally for the buyer and seller, collects the funds from the buyer and seller, controls the costs of the escrow process, and distributes the funds and titles to the proper parties. They produce a preliminary title report for potential buyers, then issue a final title report along with title insurance at the end of the sale.
The first step in the escrow process are for the buyers to immediately begin work on the loan. They need to provide two years of tax returns, recent pay stubs, and proof of funds to the underwriters at the bank. Then the bank will order an appraisal and begin the process of underwriting the loan. That usually takes about 10 days so it should be started if the appraisal is an important part of the loan qualification. Most times the loan is less than 80% of the value, so the appraisal becomes less important at that time to the buyer, however the bank cannot do much until that step is completed.
The earnest money deposit that accompanied the offer gets transferred from the realtor to the title company with 3 days after acceptance of the offer. The remaining funds from the buyer are not needed until about 5 days before close of escrow, called the closing day.
Two important dates in the escrow process are the physical contingencies removal date and the financing contingency removal date. These two dates are part of the offer contract and must be adhered to strictly. A single page form is used to acknowledge these dates.
About 5 days before closing day, the title company will issue buyers and sellers closing statements. In addition, the bank will provide their final loan document to sign. The buyers and sellers must meet with a title representative and sign off the statements and all loan documents at that time.
The day before closing day, the bank will fund the loan to the title company and they will acknowledge that in writing. Then finally on closing day, the escrow will close and the title will be recorded with the county.
The real estate agents will perform several duties on your behalf during this time and are required to keep you appraised each step of the way:
1. Identify and disclose details concerning the property
2. Deliver completed contract to lender
3. Deliver contracts to the title company
4. Coordinate and attend all inspections
5. Negotiate post inspection findings
6. Resolve problems and challenges relating to property condition
7. Coordinate appraisal appointment
8. Complete necessary paperwork
9. Arrange appointments at the house for measurements and/or future improvements
10. Notify MLS of data regarding the sale, change status to 2, 3, or 4
11. Negotiate actual occupancy
12. Coordinate actual close of escrow date
13. Coordinate and attend the signing at the title company
14. Arrange and attend final walk through
15. Work with lender to finalize loan documents
16. Arrange for final check to be sent from trust log to title company
17. Resolve any problems or challenges
18. Turn in all contract paperwork within three days
19. Negotiate Request for Repairs
20. Develop Escrow Schedule to track the dates
21. Lenders written confirmation of completed loan application
22. PRDS Seller and Other Financing Addendum
23. Buyer signature on Seller disclosures
24. Remove finance and physical contingencies
25. Arrange for deposit increase
26. RID Liquidated Damages
27. Review all disclosure signatures
28. Arrange for repairs to be completed
29. Notice of work completed form
30. Arrange Rent Back if necessary.
31. Coordinate a home warranty
32. Help with utility set-up
33. Buyer’s walk-through prior to closing which lets you confirm the condition of the property.
34. Provide close of escrow package with all home sale documents
35. Ensure transition to new residence is smooth
36. Provide a supporting list of trade professionals who can help with repairs or upgrades to your new home
Closing
• Return deposit check if offer is declined
• Obtain escrow instruction in advance of signing
• Walk through property for condition verification
• Turn in all disclosures—read and approved
• Turn in all inspection reports—read and approved
• If no physical inspections done, waiver form by the Buyer
• Buyer’s Inspection Checklist
• Read and Approved Seller closing statement
• Home Protection Plan (usually from Title company)
• Signatures of Buyer’s at the Title Company:
• Escrow Closes
• Deliver keys to buyers.