Escrow is a word that baffles many new homebuyers in Pennsylvania. It sounds like such a technical term and in a way, it is. While the definition of escrow is essentially "a written agreement," in a real estate transaction, the term refers to the steps involved in the closing process.
This post will explain a few of these important steps leaving you better informed about escrow as well as some of those tricky real estate terms you might hear. It is important to note at this time that seeking representation from a real estate attorney ensures that your interests remain protected at all times. This can be particularly important if you are a first-time buyer.
- Open an escrow account: After you and the seller have signed an agreement, the escrow company will act as a neutral third party in charge of holding any funds and documents related to the purchase. You and the seller may also elect to have an attorney perform escrow duties.
- Approve disclosures: After you have secured your financing for the property and the mortgage bank has performed its appraisal, you will have a chance to look over the seller's disclosures about any problems associated with the property. You can approve the disclosures at this time.
- Recommended inspections: While you are not necessarily required to obtain property inspections, attorneys typically recommend that buyers do so. Inspection examples include pest inspections, home inspections and environmental inspections.
- Final walkthrough: It is always a good idea to take one more look at the property before you close on the real estate transaction. This ensures no new damage has occurred and that the seller has complied with his or her end of the agreement.
- Close: Finally, you and the seller will sit down and read all of your documentation. After you both sign the necessary papers, you will make your down payment and a new property deed issued.
At this time, escrow is closed and your real estate transaction is complete. Enjoy your new Pennsylvania home.
Source: Investopedia, "Understanding The Escrow Process," Amy Fontinelle, accessed April 20, 2018