Title 1: 6-Not a Title I school Grade Levels: 9th Grade - 12th Grade
STEPS IN A REAL ESTATE TRANSACTION
1
What is an Escrow?
THE LISTING AGREEMENT
The property owner (Seller) initiates a contract, or a listing agreement, with a licensed Real Estate Agent.
2
THE SALE
Property owner (Seller) enters into a purchase contract, typically referred to as an Earnest Money Agreement, with a Buyer.
3
ESCROW
As part of the purchase contract, Seller agrees to purchase a title insurance policy for the Buyer and both agree to close the transaction with a licensed escrow company. In Oregon, most title insurance companies also offer escrow services to facilitate a convenient āone-stopā approach to closing real estate transactions.
An escrow is a neutral third party depository for legal documents and funds necessary to complete a real estate transaction. The escrow agent will disburse funds and record documents for the proper recipients according to their written instructions.
What title insurance and escrow costs are incurred in a real estate sale?
The fee for escrow services is based on the sales price of the property. This fee is typically split equally between the Seller and Buyer. However, Buyers should check with their lenders if financing is involved because some federally insured lending programs do not allow borrowers to pay this fee. The Seller typically pays for a standard ownerās policy of title insurance which names the Buyer as the insured. Charges for this policy are based on the sales price of the property. The Buyer typically pays for a lenderās policy of title insurance and any required endorsements if s/he is obtaining a new loan to purchase the property. Charges for this policy are based on the loan amount.
What services does an escrow agent perform on behalf of the Seller and Buyer?
ā¢ Upon opening of escrow, escrow agent will order a preliminary title report, which will be sent to all interested parties involved in the transaction. The report will detail the current ownership, liens and encumbrances of the property.
ā¢ Closing statements will be prepared for each party, showing all credits and debits. The escrow agent will schedule appointments for all parties to sign their final necessary documents, including any funds needed to be deposited, to complete the transaction.
ā¢ Signed loan documents are returned to the Lender, for final review and funding approval.
ā¢ Recordable documents are released to the County Clerkās office for recording.
ā¢ Once recorded, all funds are disbursed per written instructions.
ā¢ Final title policies are issued to the insured parties.
FROM PENDING TO SOLD
ESCROW FLOW CHART
Receive and review Earnest Money Agreement and Brokerās instructions.
Open escrow. Order title report.
Determine ļ¬nancing.
Information gathering from Buyer and Seller.
Receive title report. Send copies to all parties in the transaction.
Resolve any title issues. Order any payoļ¬ demands.
Review ļ¬le. Are conditions satisļ¬ed? Contingencies removed?
Prepare closing statement, closing instructions and transfer deed
Obtain signatures on all escrow and loan documents. Collect any funds due from Buyer and/or Seller
Record applicable documents with the County Recorder's office.
Close ļ¬le. Prepare ļ¬nal statements. Disburse funds.
Forward ļ¬nal documents to all interested parties - Buyer, Seller, Real Estate Agents, Lender, Broker, Attorney, etc.
NEW LOAN
Notify Escrow with name of new lender and loan oļ¬cer.
Send title report to lender.
Notiļ¬cation of ļ¬nal loan approval. Are repairs complete?
