Believe me when I say that purchases over $100,000 should be managed by an escrow account or agent. It means all monies are secure until the transaction is complete. Trust me, the fee is worth avoiding the stress of a sale ‘go wrong’. I have learnt the hard way.
What is Escrow?
An escrow account is where funds (for example a house deposit) are held in trust whilst two or more parties complete a transaction. This means a trusted third party can secure the funds until they need to be disbursed to the seller at intervals and/or at the conclusion of the agreement (property settlement).
As a seller, funds (usually a deposit) are held in the Escrow Account until either a) the buyer has received and approved the property title or b) the buyer rejects the purchase and forfeits the deposit.
As a buyer, funds are held in an Escrow Account until you have received and approved the property and property title. If this is not done (for whatever reason), you can reject the sale and have the funds returned to you.
An Escrow agent can oversee the process to ensure the funds reach the right hands. S/he ensures protection for the Buyer and Seller, that any disputes are dealt with appropriately and fairly and every step is tracked and verified.
How does Escrow work?
- Buyer and Seller agree on the set price and transaction terms (sales contract)
- Buyer commences transaction (deposit) via Escrow as the preferred payment method
- Property title process is undertaken to completion
- As soon as the property title has been transferred (and documents checked), the Escrow Agent releases the remaining funds.
- The physical title will be provided to the Buyer once the funds have been received by the Seller