First, a little about "escrow". To finalize the sale of a house, a neutral, third party (the escrow holder) is brought into the picture to assure the process will close correctly and on time. A home is said to be in escrow when in the closing process, money is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. PayPal is a good example of an escrow company.
The escrow holder makes sure that the terms and conditions of the agreement between the two parties are met prior to the sale being completed.
Escrow companies want to acquire the following pieces of paperwork:
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
You're ready to close when every step is finished in escrow process. All debts and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then receive the title to the house and the title insurance gets dispersed as outlined in the escrow instructions.
The escrow company gets a payment when the closing is complete. I'll keep you up-to-date on what comes next.