A Guide for San Bernardino, CA Home Buyers and Sellers

Buying or selling a home in San Bernardino, CA is difficult enough on its own. It just gets worse when you add in all those technical words. Take, for example, escrow. For the most part, it's a mysterious term that defines an element of the transaction that we think is crucial but that we don't fully comprehend. However, you should have a basic understanding of what it signifies and how it works. It is, after all, something that must occur between the acceptance of an offer and the completion of the transaction. This guide for San Bernardino, CA house buyers and sellers explains what happens during the escrow procedure.

What Is Escrow?

Escrow is simply the keeping of funds in a transaction by a third party who is not involved in the transaction. The escrow process in real estate is designed to safeguard both buyers and sellers during the acquisition and sale of a home.

"Escrow has a dual purpose. It assures the seller that the buyer has the funds necessary for the purchase and that the cash will be transferred after the title is transferred, as well as assuring the buyer that they will not be duped by a dishonest seller who has no claim to the title. Finally, escrow aids in the establishment of trust in a high-stakes transaction in which neither side is familiar with the other and both have a lot to lose."

Here are the key points to keep in mind about escrow and the escrow process:

• The process "occurs between the time a seller accepts an offer the buyer gets the keys."
• "To start, a buyer needs to open an escrow account in which funds are held.
• "Buyers will then need to wait for a bank appraisal, secure a mortgage, get various inspections, buy insurance, and conduct a final walk-through."
• The culmination of the escrow process takes place at closing "when the seller receives the funds and the buyer receives title to the home."
• How long the whole escrow process varies, but it can take up to two months.

Steps in the Process

The typical steps in the escrow process for San Bernardino, CA home buyers and sellers are as follows:

1. Escrow account opened – Following the acceptance of an offer, the buyer works with her agent to establish an escrow account. The account/funds will be held by a neutral third party, such as a title business, financial institution, or escrow company, with the goal of protecting both parties while all parts of the sale are finalized.
2. Appraisal performed – "During the closing process, the mortgage provider will arrange an appraisal. This is required in order to obtain financing for the property. The appraiser double-checks that the property value matches the asking price. This will protect the lender in the event that the property is ever foreclosed on."
3. Financing secured – The buyer receives financing after the appraisal, and the lender creates "a loan commitment that outlines the prospective mortgage amount, interest rate, term, and closing charges."
4. Seller disclosures approved – "Buyers should be aware of any seller disclosures made during negotiations at this point in the process. This essentially indicates that the sellers have disclosed any work done to the property that may have an impact on the home's condition."
5. Inspection performed – The buyer schedules an inspection to find out the true condition of the property.
6. Insurance purchased – This is a requirement for all buyers with a mortgage.
7. Title report and title insurance acquired – "A title report will reveal whether the property has any tax liens or ownership claims. This is a critical step in obtaining financing and progressing through the escrow procedure. In addition, buyers can obtain title insurance to protect themselves in the event of future legal challenges over property ownership."
8. Final walk-through done – Buyers have a chance to do a final walk-through before completion of the escrow process.
9. HUD-1 form reviewed – "A HUD-1 form is used across the United States at the time a mortgage loan is issued. It will specify the buyer and seller’s information, financing details, closing costs, transaction fees, and more. It is crucial to review each portion of this document before the conclusion of the escrow process."
10. Close of escrow – "Once this step has been completed, "the escrow officer will issue a new deed to the property [naming] the buyer as the owner, which is then "submitted to the appropriate county recording offices. The buyer must then provide the remaining down payment as well as funds to cover the remaining closing costs. These funds will be wired directly to the escrow account before ultimately being distributed to the seller and seller’s lender. The buyer will receive the keys to their new house after these are received, and the escrow account will be formally closed."

The San Bernardino, CA Agent Advantage

Both the buyer and the seller, as well as the lender, are protected by escrow. The procedure is pretty complicated, and you should be aware of what you're getting yourself into. Working together with an expert Pat Buys Houses Cash to ensure the process runs smoothly – and legally – is the best course of action. If you're going through the escrow process, give us a call at (951) 476-3231.

Jason Benoit I'm here to help out reader's while selling or buying home. I have 30 years of experience in real estate market. I wrote many article on real estate.