First, a little about "escrow". To close the sale of a home, a neutral, third party (the escrow holder) is brought into the picture to assure the process will close appropriately and on time. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. A simple way to understand the concept of what an escrow company does is to think of how you might use PayPal for online purchases.
The escrow company insures that all terms and conditions of the seller's and buyer's contract are performed prior to the sale being completed. This includes receiving monies and certificates, completing required forms, and obtaining the release documents for any loans or liens that have been paid with the transaction, assuring you have a free title to your house before the final price is fully paid.
Escrow holders want to obtain the following forms:
- Title insurance policies
- 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
Upon completion of all portions of the escrow, closing can take place. All payments owed and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the property is then given to you as now current homeowner and related title insurance is issued as outlined in the escrow policy.
At the close of escrow, fees are paid in an acceptable form to the escrow. As your REALTOR, I'll let you know what is an acceptable form of payment.