Step #6 — Opening Escrow
The easy step-by-step tutorial designed to make home-buyers knowledgeable and confident.
Congradulations! The days of house hunting have come to an end. Offers, counters, and all the other details you’ve been learning about so far were negotiated. Now, you’ve accepted the offer which means that you are ready to open escrow. Make room on your key chain, because the keys to your dream home are that much closer to being in your possession!
So what does it mean to open escrow? Escrow is a third party mediator that will help the transaction of a home smoothly transfer from the seller to the buyer. Every transaction will have an escrow officer and an escrow number. To begin, your escrow officer will be sending you an ‘Opening Package’ in the mail. This opening package outlines the details of the transaction including important contingency dates and the scheduled closing date. You will also receive wiring instructions for the 3% earnest money deposit that needs to be posted in escrow’s account within 72 hours of acceptance. If you are more of a visual learner, check out my video below.
Once the deposit is received, it stays safely in escrow until you release all of your contingencies OR cancel the transaction. If you cancel the transaction before you release all your contingencies, the deposit will be wired back to your account. If you release all your contingencies, then your deposit goes hard. Contingencies are in place so that you can cancel the deal without being penalized, after a previously agreed upon period of time you will be expected to release these contingencies. This is because you will have used the contingency period to gain all the information you need to make a final, educated decision confirming that you will (or will not) be buying the property. If you cancel the transaction after you have released all your contingencies, your deposit goes hard and you may not receive your deposit back. If you have more questions about this, great! I’ll be spending the next three weeks going over all contingencies in greater detail.
Be sure to look over the opening package to make sure everything looks correct. While you have your Realtor and Escrow Officer at your disposal it is important that you as the buyer also do your due diligence. After giving your opening package a read-through you’ll be required to sign and send back the doc with “ink signatures” as soon as possible. It’s normal to ask for help while going over these documents. If you need help with the vesting form, ask your agent, lender, or even better a CPA or lawyer for help. Vesting is how you hold title on a property — but we will have a separate video to go into this in detail later.
Once you have done all your investigations, appraisal and loan approval discuss with your agent if you are ready to release all your contingencies. Then, your agent will have you sign a ‘Release All Contingencies’ form that releases your deposit to the seller and prepares escrow for closing.
Tune into next week to learn all about the Inspection Contingency. As I mentioned above, contingencies are an important aspect of the buying process. They are in place to protect and education you on the specific property you have chosen, but more on that next week! One quick question before you go, is this tutorial helping you? I’ve designed this interactive guide to empower buyers, especially if it’s your first-time, as you navigate purchasing a property. I want you to feel like you don’t need to be an expert to understand buying a home. If there is anything I can make clearer, or if you simply have a question you’d like answered in the future don’t hesitate to reach out.
The best way to get a quick response is to comment on the YouTube video featured above or reach out on social media here.
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Looking forward to seeing you again next week!
-Lauren “Glasses” Biedenharn