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Oleg
Potemkin (RA), Partner Hawaii Realty International, LLC
Honolulu Oahu Hawaii
Tel:
(808) 398-9987 Fax: (808) 356-1737 Email:
oleg@hawaii-realty.com
What
is Escrow?
Both buyer and seller
deserve the assurance that no funds or property will change hands
until all of the instructions in the Purchase Contract have been
satisfied. Buyers and sellers submit signed documents and
buyer’s deposit money to be held by an independent neutral third
party (Escrow). After the conditions agreed upon by both buyer and
seller (in the Purchase Contract) are satisfied, Escrow then
distributes the documents and the funds.
The escrow holder is
an independent neutral third party; works for both the buyer and
the seller, and is authorized to follow the specific written
instructions provided by both parties. Escrow functions:
-
Receives and
deposits (into escrow’s account) buyer's initial deposit and
prepares escrow package. Requests "demands" (pay-off
statements) from existing lenders and/or lien holders. Obtains
seller's notarized signature on grant deed. Safeguards grant
deed until all terms and conditions are met and buyer’s
remaining certified funds are on deposit. Orders title search
and receives and distributes preliminary title report.
Calculates prorations pertaining to property taxes, rents,
insurance, interest, and other expenses as required.
-
Coordinates with
buyer's lender throughout the escrow process. Orders and
processes buyer's loan documents. Coordinates buyer’s
signing of loan documents and their return to buyer’s
lender. Receives buyer's final down payment funds and
coordinates funding with buyer's lender.
-
Orders recordation
of grant deed conveying title to buyer and distributes all
funds: pays-off existing loans; pays other required costs,
such as termite completion, home protection policy; etc.
Releases net proceeds to seller.
Simultaneously, the
buyer and the buyer's lender are engaged with the loan approval
process. Lender duties:
-
Orders a credit
report and other credit documentation as required (mortgage
ratings, landlord ratings). Reviews the buyer's credit and
when necessary obtains satisfactory explanations from the
buyer regarding any negative credit history. Verifies the
buyer's sources of income. Verifies that the buyer has
adequate liquid funds for down payment, closing costs, and
reserves. Requests an appraisal of the property, and verifies
that the property's value is equal to the contract sales
price.
-
Submits the loan
to underwriters for final approval.
-
Coordinates
delivery of the buyer's loan documents to the escrow officer.
And in the meantime...
While the escrow officer, lender, and buyer are diligently
working, the seller also has responsibilities.
-
The seller and the
listing agent must now prepare detailed disclosures that are
required by law (smoke detector, lead based paint, earthquake,
environmental hazards, zone disclosures, water heater,
transfer disclosure, etc.)
-
Provide escrow
officer information on existing loans to check against title
search findings.
-
With their
Realtor, make the home available for physical inspection and
other trades people as required by the purchase contract, such
as licensed Termite Company and lender's appraiser.
-
Make any repairs
agreed upon in purchase contract.
In order for your
escrow to proceed smoothly, your Realtor’s job is to coordinate
and oversee the above chain of events. Similar to dominos – each
event must occur in a timely fashion; delays in any event may
result in the postponement of escrow’s scheduled closing date.
About the author:
Phyllis Harb, a California native is a Realtor/Marketing
Specialist at RE/Max Tri City in La Canada California. Harb has
been assisting local home sellers and buyers since 1989 and offers
over 10 years additional experience in real estate lending.
Phyllis may be contacted at (818) 790-7325 or visit her web site at http://www.realtorharb.com
Your
Hawaii Real Estate Specialist
Oleg Potemkin (RA), Partner Hawaii
Realty International, LLC
1888 Kalakaua Avenue, Suite C-312,
Honolulu, Hawaii 96815 USA
Tel: (808) 398-9987 Fax:
(808) 356-1737 Email: oleg@hawaii-realty.com
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