You may hear the term escrow, escrow account or escrow agent when there is a deposit being made on a home or additional work to be completed. This term is thrown around and while it sounds fancy, but really a pretty straight forward item. When money is placed in escrow it really is important to know what the funds are for and who is holding onto them. Thats what this entry is all about.
Escrow is simply when money is held by a 3rd party until closing. In most instances, this would be the earnest money deposits, but could also be an agreed upon amount for repairs to be completed after closing or something similar.
The escrow agent, is the person responsible for holding the money until the time comes to release it. If its earnest money, the funds are released to the seller at closing. If it’s a repair, those funds are pulled from the seller proceeds and then held by the escrow agent until the work is completed. The contractor then returns an invoice to the escrow agent and is paid for their work or services.
In the case of a terminated offer to purchase, the escrow agent returns the earnest money to the appropriate party. If the deal is terminated during the buyers due diligence period, the buyer receives those funds back. If the termination happens after 5pm on the day of due diligence or later, the earnest money is released, after signatures from the buyer are submitted, to the seller.
I’ve got some additional videos on my YOUTUBE PAGE that dive in on Earnest Money and the Due Diligence period. I’ll also be talking about this subject in a few entries. Be sure to come back and check them out. Until then…..
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Chris Whitehurst
Berkshire Hathaway-RW Towne Realty
252 312 2263