Congratulations on closing escrow with your client! In real estate, escrow is a third party that neutralizes the process and protects the buyer and the seller during real estate transactions. The escrow process makes sure that both parties uphold the terms they agreed upon and ensures financial security. The escrow closing process is a critical aspect of the real estate transaction because it is the last step in the buying/selling of a home.
The escrow closing is when the funds are dispersed to the seller and the buyer officially has the home title in their name. The close of escrow is not always on the closing date of the house, but regardless of when the closing happens it is important to know about the process and any following steps.
Buyers and sellers can be uncertain during this time so it is especially beneficial for real estate agents to know this information and relay it to their clients. Here’s everything you need to know about closing escrow and what to expect as a realtor!
What Your Client Should Expect As the Seller
As a real estate agent, you can be there for your client and offer helpful advice even after the escrow closes. Here are some suggestions to ensure your client has a smooth transition from selling their home.
- Advise your client to keep all of the documents they received during the transaction and final closing statement. These documents will be necessary for their tax returns.
- For future reference, your client should keep all documents received from the lender if they paid off a mortgage to confirm the payments.
- Make sure your client calls their utility companies to notify them that they will no longer be a resident of the home after the closing date. This is important or else the seller will still be paying the water and electricity bill!
What Your Client Should Expect As The Buyer
There are many things for a new homeowner to consider after the escrow closing. You can give your client insightful information that they may not be aware of.
- Tell the buyer to keep all the documents received during the transaction, final closing statement, and Policy of Title Insurance.
- If applicable the buyer should prepare for their first mortgage payment and set some money aside.
- Your client may receive a Supplemental Property Tax Bill. Under California law, after there is a change of ownership to a home, the property is reassessed. This reassessment accounts for changes that add property value and covers the difference between the previous taxes and newly assessed taxes of the home.
- Make sure they change their address information and notify the following: bank, insurance company, credit card provider, employer, DMV, post office, tax agencies, subscription services, and friends/family.
- Notify your buyer to change the locks or keypads. Although the seller handed over the keys to the house they may have extra copies. For safety reasons they should change the locks or keypads just in case.
- Don’t forget to remind your client to call their utility companies and tell them they are moving in advance so they have all electricity, water, and cable set up for the move-in date.
What to Expect If You Are The Real Estate Agent
As a real estate agent, your time with the client is coming to a close. However, there are a few components left to take care of.
The escrow company holds the earnest money deposit and then notifies the real estate agent that they are holding the earnest money and the funds are cleared. This means that the funds are ready to be withdrawn confirming that the buyer has the money available for the purchase.
If there are multiple requests of escrow deposits, the real estate agent expects multiple confirmations that the funds are cleared. The real estate agent will then provide each confirmation to the listing agent and keep it on record at their broker firm.
Final Documents You Can Expect to Receive
The real estate agent receives an official letter from the escrow agent confirming the earnest money deposit.
The real estate agent receives a document called an ALTA Settlement Statement. The ALTA Settlement Statement is like a receipt documenting all parties involved and breaks down the real estate transaction in great detail. The buyer and seller individually get a Closing Disclosure document and these documents are compiled together in the Alta Settlement Statement.
The Closing Disclosure is exclusive information for each buyer and seller but the version of them in the ALTA Settlement Statement does not give away exclusive information pertaining to each party.
Lastly, stay in touch with your client and offer to answer any other questions. You never know when a client can lead you to a referral or another transaction!
Want to Learn More About Escrow?
If you want to learn more about escrow, real estate, or the closing process, contact us at New Venture Escrow. Our team of experts are confident we can make your escrow process as smooth as possible from beginning to end.