If you are new to the Lynden, WA real estate game, you likely have noticed by now that there is a whole new set of lingo you need to learn. Some of these terms can sound scary and feel intimidating. For example, “Escrow” is one term that a majority of first time buyers didn’t fully understand. Luckily, escrow isn’t as scary and threatening as it sounds. In fact, it is simply the financial tool that allows the important items to be stored in a neutral holding area. These things include the earnest money check, the purchase and sale docs and more.
Basically, the escrow officer is a 3rd party that is either an attorney, someone from a title company or a closing company. They are there to make sure that the closing of your Lynden, WA real estate sale goes smoothly. Whether it is the transferring of the funds or documents, escrow protects both parties by making sure no funds or properties have been exchanged until all the agreement’s conditions have been met. Another term you will hear during the Lynden, WA real estate process is “contingencies”. Contingencies are when an offer has been accepted but the sale is not finalized until certain criteria have been met. These are usually home inspection, mortgage approval or appraisal. But what do “contingencies” have to do with escrow? Every time a task has been completed (like an appraisal, inspection, etc.) and the appropriate document has been filed, they will be checked off the list and you will be one step closer to closing. Once all of the steps and conditions have been finalized, the money that is due to the owners of the Lynden, WA home for sale will be transferred to them, the escrow officer will record title and the new buyer will officially own the home.
So now that we know the basics of what escrow is, here is how it protects both parties. For buyers, it ensures that the items the seller agreed to (like fixing faulty wiring or making a necessary repair) is done before the close of escrow. If at your final walk through something they agreed to isn’t done, the sellers will not see the money from the buyer until they complete their end of the deal. Now for the seller, they get protection if the buyer backs out last second for no legitimate reason. That earnest money check a buyer offers as a sign of good faith with the purchase and sale agreement? That is released to the seller.
Since the escrow officer is a third party, they are not free. They usually cost somewhere between 1%-2% of the cost of the home. Who pays will vary. Sometimes the buyer will pay, sometimes the seller will pay and sometimes they split the cost.
Not that you know this key term in Lynden, WA real estate, you likely understand the importance of Escrow. It is basically a safe guard that ensures everyone lives up to their end of the bargain AND if something goes wrong, there is a buffer in place. For more information on the ins and outs of Lynden, WA homes for sale, call me at 360-410-0848.