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Understanding the Close of Escrow

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By : Roby Hicks    99 or more times read
There are various terms used in the real estate industry that you may not understand. One of them is the word escrow. An escrow happens when a third party is involved in the purchasing of the property. Normally, the seller will entrust the management of the sale to a third party before the official transfer of ownership to the buyer takes place. In this process, an escrow agent will be needed. The third party will also need to make an escrow account for the transaction.

Aside from the word escrow, there is also the close of escrow. Many do not understand this, but this is just another term for closing, the final step in home purchase. This is where the transfer of ownership takes place. The final step should go smoothly. However, if there are problems, closing may fail. Problems may arise due to lack of preparation. The closing agent who fails to prepare the necessary documents normally causes this. They may have prepared the documents needed but the information indicated there is not the same with what has been agreed upon.

To avoid problems, find a good closing agent. The buyer is usually given the chance to choose such agent. You can refer to your real estate agent for this. He should be experienced and professional. Be aware that aside from preparing the documents, he is also tasked to present the documents to you and the other parties involved. If any of you have questions, he should be able to provide satisfactory explanation.

As mentioned above, there are various parties involved in the close of escrow. They are the seller, the buyer, lender representative, brokers, real estate agents and lawyers. Some do not have lawyers with them. However, they should have someone who can represent them in the transaction and protect their best interest. Having lawyers will also ensure that the legal procedure is being followed. This will also ensure that no fraud is taking place.

During the transaction, fees will be paid. The allocation of payment will be revealed as well. Although the actual payment will happen after the transfer of ownership is recorded, the other parties will need to check and approve everything to ensure that it is the previously agreed amount.

The closing is very important as this is the time when documents are presented and signed. However, before you sign the documents, make sure that you fully understand them. Do not hesitate to ask questions if there are items you doubt. In addition to the document discussion, you will also need to pay the closing cost. The closing cost is made up of different fees. You will know how much you will pay by checking the settlement statement. This will be given to you in advance. You can make the negotiations beforehand to lower the closing cost.

The close of escrow is essential, which is why it is crucial that you have a good closing agent to make the necessary preparations. This will help prevent problems during the transaction.
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