Escrow, a crucial stage in the real estate transaction process, marks the culmination of the homebuying journey. It involves a neutral third party, typically an escrow company, holding funds and documents on behalf of both the buyer and seller until all agreed-upon conditions are met. Understanding the steps that follow escrow closing is essential for a smooth transition into homeownership. This comprehensive guide will provide valuable insights for both homebuyers and realtors on what to expect after escrow closes.
Responsibilities of the Seller After Escrow Closing
1. Vacate the Property:
Upon the closing of escrow, the seller is obligated to vacate the property and hand over the keys to the buyer. This includes removing all personal belongings, ensuring the property is in a clean and habitable condition, and providing access to the buyer as agreed upon.
2. Finalize Utility Transfers:
The seller should promptly notify utility companies, such as electricity, gas, water, and trash removal services, of the change in ownership. This ensures a seamless transition of utility services to the new homeowner.
3. Provide Final Closing Statement:
The seller is responsible for providing the buyer with a final closing statement, which outlines the details of the transaction, including the purchase price, closing costs, and any outstanding liens or encumbrances on the property.
Responsibilities of the Buyer After Escrow Closing
1. Take Possession of the Property:
Once escrow closes, the buyer officially takes possession of the property and assumes ownership. This involves inspecting the property to ensure it is in the condition agreed upon during the purchase process.
2. Set Up Utilities:
The buyer should contact utility companies to establish new accounts and schedule the activation of services. This includes electricity, gas, water, trash removal, and any desired internet or cable services.
3. Secure Homeowners Insurance:
Homeowners insurance is essential to protect the property and its contents against potential risks. The buyer should secure a policy that meets their specific needs and provides adequate coverage.
4. Change Locks:
For security reasons, it is advisable for the buyer to change the locks on all exterior doors and windows. This ensures that only authorized individuals have access to the property.
5. Update Address and Notify Relevant Parties:
The buyer should update their address with the post office, banks, credit card companies, and any other relevant parties to ensure timely delivery of mail and correspondence.
Responsibilities of the Real Estate Agent After Escrow Closing
1. Confirm Earnest Money Deposit:
The real estate agent should receive confirmation from the escrow company that the earnest money deposit has been transferred and cleared. This verifies that the buyer has the necessary funds available for the purchase.
2. Receive Settlement Statement:
The agent will receive an official settlement statement, also known as the Closing Disclosure, from the escrow company. This document provides a detailed breakdown of the transaction costs and disbursements.
3. Distribute Funds:
The real estate agent is responsible for distributing the proceeds of the sale to the seller, including any commissions or fees due.
4. Provide Post-Closing Support:
A reputable real estate agent will continue to provide support to their clients even after escrow closes. This may include answering questions, resolving any issues that arise, and offering guidance on homeownership.
Frequently Asked Questions
1. What is the difference between the closing date and the escrow closing date?
The closing date refers to the day when the buyer and seller sign the final closing documents and transfer ownership of the property. The escrow closing date may occur before or after the closing date, depending on the specific terms of the purchase agreement.
2. What happens if there are delays in the escrow process?
Unforeseen circumstances, such as title issues, financing problems, or appraisal discrepancies, can lead to delays in the escrow process. Both the buyer and seller should be prepared for potential delays and communicate any concerns or changes to their real estate agent promptly.
3. What are the common closing costs for buyers?
Typical closing costs for buyers include loan origination fees, title insurance, property taxes, homeowners insurance premiums, and attorney fees. The exact costs will vary depending on the location, loan type, and other factors.
The escrow closing process marks a significant milestone in the homebuying journey. By understanding the responsibilities of both the buyer and seller, as well as the role of the real estate agent, individuals can navigate this transition smoothly. Remember to address all necessary tasks, such as vacating the property, setting up utilities, and securing homeowners insurance, to ensure a successful and stress-free start to homeownership.
Step By Step Escrow Process | Everything Explained!
FAQ
What happens after close of escrow?
What does it mean when escrow closes?
What is the Escrow Closing process?
The escrow closing process is a critical aspect of the real estate transaction because it is the last step in the buying/selling of a home. The escrow closing is when the funds are dispersed to the seller and the buyer officially has the home title in their name.
What should I do before closing escrow?
The second to last step before the close of escrow is to take one more look at the property. While this step is not obligatory, it is highly advisable. Take a walkthrough of the house to examine whether it is in the same condition as you agreed upon.
When is the close of escrow?
The close of escrow occurs when the buyer officially takes possession of the property (normally, at closing). Before you get to the close of escrow, there are crucial escrow steps you need to take. Learning what they are before you list your house can help the entire home-selling process make more sense.
What should a new homeowner do after the Escrow Closing?
Make sure your client calls their utility companies to notify them that they will no longer be a resident of the home after the closing date. This is important or else the seller will still be paying the water and electricity bill! There are many things for a new homeowner to consider after the escrow closing.