Escrow and settlement agents oversee the closing of a real estate transaction.
An escrow agents has fiduciary responsibility to properly account for the escrow funds and ensure that the usage of funds is explicitly for the purpose intended A “settlement” or “closing” agent or officer, is an impartial third party who plays the important role of overseeing the final details of a real estate transaction. Without a closing, there is no sale.
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Q: What is a closing date?
A: This is the date on which you complete the purchase or sale of a property. The closing date is agreed upon in the purchase contract. A closing begins when the agreement is signed and ends when the property changes owners.
The term "escrow" is used in some states (Southern California, Oregon) while other states (New York, New Jersey) refer to the process as "settlement" or "closing" services.
Q: My real estate broker suggested a settlement service. Can I choose my own?
A: Yes you can. It's not uncommon for brokers and agents to suggest a particular settlement service. Laws prevent real estate settlement companies from paying brokers a referral fee.
So, chances are good that the relationship between the broker and settlement service is based on a history of successful transactions.
Q: How long does a closing take?
A: The process usually takes four to eight weeks.
Q: What does a settlement agent/officer do?
A: The person in charge of the closing must be independent, as he or she represents all sides of the transaction and makes sure that all the terms of the contract are met. The escrow or closing agent's general responsibilities include:
- Holding financial deposits in trust
- Writing detailed closing instructions based on the purchase agreement
- Gathering all legal documents related to the transaction
- Ordering a title examination or preliminary report on the property
- Clearing all title issues discovered during the search
- Securing title insurance
- Collecting documents from the buyer's lender
- Making sure all terms and conditions of the purchase contract are met
- Recording the deed and other necessary documents
- Ensuring that the process moves along smoothly and that the transaction closes on time
Q: What are common closing costs?
A: If you are taking a loan to finance your purchase, here are some common closing cost expenses:
- A closing fee for the escrow or closing agent
- Preparation of legal paperwork
- Appraisal review fee
- Credit report fee
- Underwriting fee
- Mortgage insurance
- Survey fee
- Pest inspection fee
- Notary fee for authenticating signatures on legal documents
- Homeowner's insurance
- Courier and overnight delivery fees
- Tax service fee
- Recording and transfer fees
Fees for these services vary. Some banks and other lenders use their own closing agents. Some title companies offer special rates that may include escrow services, home warranty and title insurance at a "bundled" rate, so it pays to shop around.
Q: Who handles the closing process in my state?
A: This can vary. Most closings are overseen by title companies except in the western part of the nation where escrow companies affiliated or owned by title companies and independent escrow companies often manage the closing (in northern California title companies will take care of this service).
A closing attorney presides over the transaction in New York and most New England states, as well as, Alabama, Georgia and the Carolinas.
Q: What kind of advice can my settlement officer provide?
A: It's important to remember that settlement officers carry out written escrow instructions (a summary of what has been agreed upon for ALL parties in the purchase agreement and counter offers) and close real estate transactions.
They cannot provide you with information about property values or offer legal advice. If you sign loan documents at the escrow office during closing, the escrow officer cannot give advice on mortgage rates or terms.
Q: Who pays settlement fees in my state?
A: Generally, the buyer pays most of the closing fees. In some states, the buyer and seller share the costs. In others, the seller is responsible for the closing fees.
The party that pays the closing expenses is negotiable. A motivated buyer or seller may agree to pay all escrow closing fees as a way to finalize the deal.