Want to Know About Escrow?
Securing the funding for a real estate property can be an arduous process regardless of the buyer’s financial situation. When buying or selling condos in the Greater Toronto Area, you are going to be dealing with large sums of money. This is especially true when you are in the closing phase of the real estate agreement. there are going to be steps laid out by your real estate agents that will protect each party in the sale.
What is Escrow?
Escrow is a financial term that refers to a plan made by both the buyer and seller with a neutral party to hold the transaction of funds until all the conditions are met. Escrow ensures that both the buyer and the seller are satisfied before the sale is final.
Dealing with real estate and related terminology can be confusing for all parties. The explanations below will help make this real estate step simple.
Escrow in Real Estate
When you are looking for condos in Oakville, you are going to enter a phase called the closing phase of a real estate transaction. This is when the funds are transferred. When it comes to those large sums of money, there is no room for mistakes. Therefore, using a third party is a security measure that will protect both the seller and buyer before the deal is sealed.
The Process of Escrow
While in negotiations, the buyer and the seller of the property are going to work together to choose an escrow officer or organization they want to work with. Once the buyer has made an offer on the property, they will give a down payment called an earnest money deposit. The escrow officer will collect the deposit and all associated contracts and paperwork.
The third-party will hold onto the money and the documents in a safe place where neither the buyer nor the seller can touch it. This point in the real estate transaction is called being in escrow.
While in escrow, the buyer is finalizing their mortgage documents and securing the funds to finalize the condo purchase. Once the buyer’s part is done, the escrow officer will handle the rest of the transactions to finalise the sale. The escrow officer will transfer all the funds to the seller, along with all the paperwork that goes with it.
Every step the escrow officer makes is recorded so there are no disagreements about documents or the way the money has been disbursed. The idea is that with a neutral third-party to handle the escrow stage of a sale, both parties will come out of escrow happy.
What if Something Goes Wrong While in Escrow?
We know that occasionally something can go wrong with a condo sale. If something goes wrong with the final transactions, the condo can fall out of escrow. Falling out of escrow means that the sale cannot continue because either the seller or the buyer can’t meet the mutually agreed-upon terms.
Reasons to fall out of escrow include:
- The appraisal of the condo is too low
- There are problems with the condo as pointed out by a home inspector
- The financing for the buyer did not go through
Even though this isn’t the situation either the buyer or the seller wants to go through, it does mean that the sale cannot be completed. What falling out of escrow means is that the deal may take longer than planned to finalize, if it can be finalized at all.
Get the Help of Local Realtors to Handle Your Condo Sale
Having a local realtor who is aware of the escrow process when buying or selling condos in the Greater Toronto Area is an asset to you. If you are in the process of finding condos for sale around Oakville, you want an agent who understands how escrow works and can get you a good escrow officer. Contact Alex Irish today. We have all the skills you need to get through the escrow and closing process faster and more securely.