How Does Escrow Work When Selling a House?
It is highly probable that you will have to familiarize yourself with the escrow process if you are selling a home. Whether you have built one house or have a list of homes you want to sell, each real-estate transaction will be finalized through the escrow process.
Escrow agents will handle the release of the property to the buyer of the new home, as well as the release of the funds for the new home sale once the transaction is closed. In this article, we will go over exactly what the process to sell your home(s) with an escrow service in California entails.
New Home Sale Escrow Process, Step-by-Step
Below, you will find the steps of the escrow process of a new home sale. Although this process outlines the escrow process for the state of California, the list of steps written below can be applied to other states as well.
How to successfully close a new home sale escrow transaction
- First, with the assistance of the escrow company, you will set up the terms of the escrow agreement with the buyer of the new home.
- The buyer will deposit all the agreed upon funds into the escrow account, covering the full sales amount of the home, plus any additional fees.
- The buyer will then present all relevant documentation to the escrow company to uphold the real-estate agreement.
- The seller will deposit a deed to the property that names the buyer as the owner of the new home.
*This deed is crafted by the escrow company to meet all federal and state guidelines.
- Then, the seller will present any additional required documentation to close the new home sale.
- If the above conditions are met within the stated escrow timeline, the transaction closes and the property ownership is recorded to the new buyer.
How Much Does Escrow Cost for a New Home Sale?
Many wonder about the actual cost of using an escrow service. Although the price depends on each specific transaction as well as the state it is being held in, a real-estate escrow process normally costs between 1% and 2% of the transaction price.
It is important to remember that the price you see an escrow company charge might not always be the full price you end up paying for your escrow service. Many escrow companies will add in hidden fees on top of the percentage of the transaction price. To avoid this problem, choose an escrow service that is fully transparent with prices.
The escrow process can get even more expensive if things go wrong during a transaction. An escrow process that drags out can be emotionally draining for sellers that have spent years building a new home they want sold, making it all the more important to choose an escrow service that is fast and efficient.
How Long Does Escrow Take for a New Home Sale?
As mentioned before, the escrow process can drag out considerably depending on a variety of factors, including state laws, what parties have agreed to, and who the escrow service provider is. In the hands of the right escrow agent, however, the new home sale escrow process shouldn’t take more than 30 days.
Should be a 30 Day Escrow Process
New home sales that take longer than 30 days to finalize will leave both parties in the escrow agreement in limbo while money sits in an escrow account. This can not only add on extra costs to the escrow process, but will leave all parties involved extremely frustrated. The emotional cost of a bad escrow should also be calculated when choosing an escrow provider.
Choosing The Right Escrow Service
The escrow process timeline depends largely on your specific transaction. However, it is also crucial to choose an escrow service that guides you through the entire process and implements technology that makes the escrow process fast, easy, and effective.
If you are selling homes and need an escrow provider to manage the transaction, then New Venture Escrow offers the easiest and fastest escrow in California. Contact our escrow experts and we will guide you through the escrow process for a new home sale. If you just need more help and want to learn the escrow process for a home resale or how escrow works when refinancing, check out our other resources available on our website.