So you may have heard the term Escrow Account, but really, what is Escrow? Not only does an escrow service benefit a Tucson home seller, but the Tucson home buyer as well.
An Escrow service is basically an impartial third party. The third party could be a Title company or even a Tucson attorney and works to keeps both the buyer and seller honest.
Using An Escrow Service
The Escrow service will work to help the home sale along and will hang on to the important documents until the closing occurs.
The Escrow service will be accountable for certain items at all times. They will hold on to the deposit or earnest money along with the signed contract until the sale is finalized. Without an escrow account, buyer and sellers in Tucson would have to exchange these items on Good Faith before the sale and hope that nothing changes and neither the buyer or seller backs out of the deal.
There will be more and more documents that are created as the home sale proceeds and all of these documents will be handed over to the Escrow service to keep with the Escrow account. The Escrow service will monitor and make sure all the steps are followed through to make sure the home sale can be completed. These steps may include reports of repairs, inspection reports, and any documents that show what must be done by the Tucson homeowner prior to closing.
Once all the steps are finalized and both sides have signed contingency release forms for each step the sale can proceed. Once the homeowner has collected any money that is owed, the Tucson buyer will take possesion of the home’s title. This shows that they now own the home.
Adding Money to Escrow
The amount of money in an escrow account will vary based on what the buyer and seller have agreed upon. The fee for the escrow account may be up to 2% of the purchase price.
The Deposit
When money is added to an escrow account it is referred to as earnest money or the escrow deposit. Once the homeowner accepts an offer, the money is added to this escrow account. The Title company or attorney will hold on to this money, occasionally in the form of a check, until the end of the sale.
Sometimes, this is referred to as a good-faith deposit. That means that if the Tucson buyer does not follow through on the offer, the funds may go to the seller.
Where Does the Earnest Money Come From?
Sometimes the buyer doesn’t have enough cash in their account to cover the earnest money. They may go to the lender who is providing the mortgage and see if they will also lend enough money to cover the escrow deposit.
The Benefits
Many people may find the escrow service for a home sale to be a hassle. However, it is really beneficial for everyone involved.
The Tucson buyer is protected because the seller is not hanging onto the funds. In the event that the seller doesn’t perform repairs or meet agreed upon expectations the buyer’s deposit is safe until the sellers completes the requirements.
Should a buyer back out of the deal at the last minute, they may be breaking the contract. A broken contract could allow the deposit money to go the seller. Unfortunately, the seller will need to start all over again with a new buyer.
In some cases, it may not be necessary to setup an escrow account. If both the Tucson buyer and seller follow through on both sides of the contract and the sale proceeds perfectly. However, the escrow account is there to protect both sides if something goes awry.
If you have a home in Tucson that you are interested in selling your Tucson house and would like a free, no-obligation offer, please call Stained Glass Homes at 520-200-3334 or click on the link below and send us your contact information. We will be in touch with you shortly.
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