Your Guide to a Successful Escrow Period
When buying or selling a home, some states handle the transaction process through Escrow. Nevada is an escrow state. Escrow refers to the period between when the seller accepts the buyer's bid and when the buyer takes control of the property. During this time, the buyers are expected to settle and confirm everything from the condition of the house to the structure of their loan.
Because there are so many details that need to be addressed, it's not uncommon for an escrow to run far longer than the buyer ever anticipated. In most cases, the escrow process is successful with no problems, though there are some things to watch for.
Use Your Words
Home buyers need to be proactive during the escrow period. From the bank to the title company, there are a number of moving parts that need to be kept on track. Buyers should sit down with their real estate agent and map out the escrow timeline so they will have a schedule that they can refer to. If buyers made contingency requests from the seller, these will need to be settled during this time as well. For example, if the seller was requested to repair the gap in the fence, the buyer needs make certain that this was done. Paperwork will also need to be completed during this time, so buyers should prepare a list of questions if any of the clauses are confusing or unfamiliar to them.
Buyers will usually be assigned an escrow agent during this time. Similar to working with a real estate agent, the escrow agent is there to keep the deed, mortgage, and down payment in safekeeping until everything is ready to be transferred. They'll also work with the title company to make sure the title insurance policy is being handled and other issues dealing with the home transactional process. Only when all contingencies have been met and both the buyer and seller agree that all terms have been met will the escrow agent deliver the funds to the seller and the deed to the buyer. Rules vary according to both state and local laws, so buyers may need to ask their agent or escrow agent about the details.
The buyer's lender may have a number of items of their own that need to be tended to before officially approving the mortgage loan. Buyers need to work with their lender to meet these requests during the escrow period. For example, most lenders will require the buyer to take out a specific level of home insurance coverage. They may also require that property taxes and home insurance be handled through a mortgage escrow account, vs. paying for these items annually. The escrow period is a good time for buyers to read the fine print on their contracts before signing and understand what obligations they will have after closing.
Closing costs refer to what a new home buyers may need to pay at closing in addition to their down payment and any prorated insurance or property taxes. They vary by county and state but can account for up to 5% of the purchase price of the home. In some cases, buyers may be allowed to combine some of these costs into their loan. Closing costs may include the following:
- Appraisal fees
- Loan origination fees
- Discount points
- Title searches
- Home inspection fees
- Deed-recording fees
- Credit report charges
If certain contingencies are included in the purchase agreement, home buyers may have the right to renegotiate the original offer of the home during the escrow period. For example, if a home inspection uncovers black mold in the crannies of the walls, the buyer can ask the seller to lower the cost of the property. Or they may ask for the seller either correct the problem at their cost or to pay for part of the closing costs. Inspection items can be tricky, so it's best to seek the expertise and guidance of an experienced real estate agent.
Most home buying escrow periods are bump-free. However, understanding the process can make it easier to anticipate any obstacles and plan accordingly. One of the biggest assets a buyer has is undoubtedly their Lake Las Vegas real estate agent. It's the agent who can pick up the slack, answer the questions, and look over the paperwork to make sure that everything's in order.