First, a little about "escrow". To complete the sale of a home, a neutral, third party (the escrow agent) is employed to assure the process will close properly and on time. A home is said to be in escrow when in the closing process, funds is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. A simple way to think of what an escrow company does is to compare it to PayPal for online purchases.
The escrow company is careful to assure that all terms and conditions of the seller's and buyer's negotiated agreement are completed prior to the sale being completed. This includes getting payments and records, completing required forms, and seeking out the release documents for any loans or liens that are to be cleared with the transaction, assuring you have a clear title to your home before the final price is fully paid.
Escrow agents collect the following legal documents:
- Tax statements
- Fire and other insurance policies
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
Closing on the property happens when all of the procedures of the escrow are complete. All expenses like title insurance, inspections and real estate commissions are paid. You'll then receive the title to the house and the title insurance gets issued as stated in the escrow instructions.
When closing is completely finished, you'll make a payment to the escrow agent. As your real estate professional, I'll let you know what is an acceptable form of payment.