First, a little about "escrow". To close the sale of a property, a neutral, third party (the escrow agent) is brought into the picture to assure the process will close properly and on time. A home is said to be in escrow when in the closing transaction, funds is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. For example, in an Internet auction, PayPal is the neutral third party that obtains the buyer's cash, and then sends the payment to the seller.
The escrow holder insures that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being finished. This includes getting funds and paperwork, finishing required forms, and obtaining the release documents for any loans or liens that have been paid off with the transaction, assuring you have a clean title to your house before the negotiated price is fully paid.
These are the legal documents that escrow holders usually look to collect:
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
Upon completion of all portions of the escrow, closing can take place. At this time, all payments and fees for inspections, title insurance and real estate commissions are paid out. You'll then obtain the title to the home and the title insurance gets dispersed as agreed upon in the escrow instructions.
When closing is in it's last step, you'll make a payment to the escrow holder. As your real estate agent, I'll let you know what is an acceptable way of paying.