So...You want to buy a house?


By Sara W.Peterson

Once the contract is ratified, that is all of the negotiation points are agreed upon and the final contract is signed by both you and the seller and copies delivered, its on to escrow.

The escrow companies job is to act as a neutral third party for both you and the seller. They hold all of the money that you provide and the clear title that the seller effectively provides by signing the contract. They make sure that all of the terms of the contract are met and that everyone gets paid what they are due. This includes the pest inspection company, the appraiser, lender fees, any inspectors, title insurance, us as your agent, the seller's agent if any, etc., with the balance of the funds going to the seller as payment for the transfer of the deed.

One of the key activities that takes place in escrow is the researching of the title. This is done by the Title Insurance company, which here is most often the escrow company as well. The purpose is to prove to you and the lender that the seller has clear title to the property and that is not encumbered by any liens or has other problems that cloud the title. If the title is clear, the Title Company commits to insure both the Lender and you should any covered problems be discovered after settlement.

Title companies have become very customer service oriented in the last few years and have even created a floater signing accommodator, a fancy name for a person who will come to any place we select, even your home, to complete the transaction.

Sometimes, in California, the sellers feel that they have the "right" to select the Title Insurance company which is often the escrow company as well. According to RESPA which is the governing regulations concerning real estate settlement procedures, the buyer has the absolute right to make the determination as to which Title Insurance company to use. We have run into difficulty with this in the past since the title companies have done some very intense marketing to the listing agents, so sometimes, as part of the negotiation process and in the interests of your overall success, we may concede the point and allow the sellers to select the escrow company. As time goes on, we will continue to try to educate these people, that just because the sellers may be paying for something, doesn't mean that they are entitled to make the provider choice. But sometimes it just isn't worth fussing over, if you know what we mean.

One of the final, but critical tasks for you to accomplish before closing is to arrange for homeowner's hazard insurance and flood insurance if required. Before closing you will need to provide to the Escrow Officer evidence that you have obtained this insurance. We will help you evaluate various insurers if you wish and obtain competitive bids.

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