Do you have questions about escrow? Like, what is it and how does it work? Whether you need residential escrow or you’ve been thinking about buying a business, there are a few things you should know. Let’s do a quick review to help you get up to speed on the basics. Read on for a simple guide.
So, what exactly do we mean when we talk about escrow? Essentially, this type of account is overseen by a neutral third party who briefly holds property or money until an agreement is completely fulfilled. For example, let’s say that you’re buying a house but the seller has agreed to have the roof repaired before the transaction is finalized. Well, an escrow agent wouldn’t pay the seller until they followed through on those roof repairs. The money is simply held in an account until everything is taken care of. The main thing to understand is that escrow protects both buyers and sellers during valuable exchanges, like buying real estate.
Types of Escrow Accounts
Another thing to consider is that there are different types of accounts. It simply depends on your particular situation…
We already covered escrow accounts for home buying, but there’s another account for homeowners that can hold their insurance or yearly property taxes. This account is a little different because it will last for as long as you’re paying off your mortgage. It won’t cover things like HOA fees or utility bills, though. Keep in mind, most lending companies will require you to work with an escrow company when you’re approved for a mortgage.
Of course, there are also business escrow accounts. If you decide to buy or sell a business, you’ll still need to work with an escrow agent because this is another scenario where both parties have a lot to lose. The sale of a business or a home can take months and a lot of paperwork, not to mention the negotiations that are involved. Having a neutral third party around to oversee the financial details can do a lot for your peace of mind.
There are other ways escrow can be used as well, such as for selling valuable jewelry, floating homes, or even antique cars that are shipped overseas. Involving a third party helps to safeguard these kinds of transactions that could otherwise end up costing you, either in money or stolen valuables. Another one of the main benefits of these types of accounts is that they can help you avoid disputes that require legal action to resolve, and we all know how costly attorney’s fees can become.
Setting Up an Escrow Account
So, as you can see, an escrow agent has an important role to play in a wide range of transactions. If you need reputable escrow services in the San Ramon area, contact us at Bay Area Escrow by calling (925) 831-9099. We know it can seem confusing, but our team of licensed and experienced agents can handle all of your escrow needs and guide you through the process.