If you’re going through a real estate transaction, you’ve surely heard about the escrow process. But are you aware of what it entails? Read this post by Louisiana Title Services Inc. in Baton Rouge, LA to learn about it.

The real estate buying process has many steps, and you need to know about all of them if you want to go through them successfully. Needless to say, this can be a challenge at times.

For example, there’s the escrow process, which is a crucial component of real estate transactions. It offers a safe and neutral way for buyers and sellers to complete their deal, ensuring that both parties fulfill their contractual obligations before the property and funds change hands.

To help you out, this post will give you a better idea of how escrow works, the parties involved, and the key steps in the process.

Need help figuring out your real estate transactions? Call Louisiana Title Services Inc. in Baton Rouge, LA at (225) 769-2900 for expert assistance.

How to Go Through the Escrow Process

What Is Escrow?

Escrow refers to a financial arrangement where a third party holds funds or assets on behalf of the buyer and seller until certain conditions are met. The escrow company or agent acts as a neutral intermediary, ensuring that both sides uphold their end of the agreement. For real estate transactions, the escrow process typically involves handling the buyer’s earnest money deposit and overseeing the transfer of the property title once the transaction is finalized.

Parties Involved in the Escrow Process

1. Buyer: The person or entity purchasing the property.
2. Seller: The person or entity selling the property.
3. Escrow Agent/Company: A neutral third party that manages the escrow account and ensures all terms of the agreement are met before funds and property are transferred.
4. Real Estate Agents: Typically, both the buyer and seller have agents who help manage the process, ensuring that their respective clients’ interests are protected.
5. Lender: If the buyer is obtaining a mortgage, the lender is involved in verifying that all financial conditions, such as appraisals and inspections, are completed to their satisfaction.

Call Louisiana Title Services Inc. in Baton Rouge, LA at (225) 769-2900 for professional title services through your complex real estate transactions.

Key Steps in the Escrow Process

1. Opening Escrow: Once the buyer and seller agree on a purchase price and sign a purchase agreement, the buyer typically makes an earnest money deposit. The funds are held in an escrow account, showing the buyer’s good faith and intent to follow through with the purchase. The escrow agent will then open the escrow account and manage the process.
2. Contingency Period: During this time, the buyer conducts inspections, appraisals, and other due diligence to verify the property's condition and value. Common contingencies include home inspections, financing approval, and the sale of another property. If any issues arise, the buyer may negotiate repairs or ask for price adjustments, or in some cases, back out of the deal. The escrow agent tracks the fulfillment of these contingencies.
3. Title Search and Insurance: The escrow agent orders a title search to confirm that the seller has legal ownership of the property and that there are no outstanding liens or claims. Title insurance is also purchased to protect against potential disputes over ownership.
4. Loan Approval: If the buyer is using financing, the lender must approve the loan. The escrow agent ensures all loan documents are completed and that funds are available to close the deal.
5. Closing the Deal: Once all contingencies are satisfied and the lender approves the loan, the parties can move toward closing. The buyer deposits the remaining funds into the escrow account, and the seller signs over the deed. The escrow agent oversees the exchange of funds and legal documents, records the transfer of the deed with the local government, and disburses the funds to the seller.
6. Closing Escrow: After the transaction is complete, the escrow account is closed. The buyer receives the keys to their new home, and the seller receives payment.

Why Escrow Matters

The escrow process protects both the buyer and the seller by ensuring that no funds or property change hands until all contractual obligations are met. It helps to minimize risk and adds a layer of transparency and trust to complex transactions, ensuring a smooth and secure closing.

Are you ready to seal the deal? Call Louisiana Title Services Inc. in Baton Rouge, LA at (225) 769-2900 for all the title services and assistance you may need to have a safe and successful closing process.