What Does an Escrow Company Do?

By Jeff Lender

If it’s your first time buying real estate, you have probably heard the word “escrow” being tossed around. Your real estate agent might have mentioned the seller keeping documents in escrow or may have asked you to put money in an escrow account. If you’re confused about escrow, you’re not alone; many others have expressed the same confusion. If you want to know more about escrow, never fear! The team at World Wide Land Transfer is here to tell you more about escrow and what escrow companies like us can do for you during a real estate transaction.

What is Escrow?

In many types of transactions, including real estate deals, funds, documents, and even physical objects like keys, a third party needs to hold them. It’s a show of good faith by the buyer and the seller, so that all parties involved know there won’t be any funny business when it comes time to transfer funds and sign over the title to the new owner. Anything held by a third party is known as being held in escrow.

While escrow is an important part of your closing day, it’s not the only case where escrow is used in real estate. For example, suppose you have a company that services your mortgage. In that case, they will usually place a portion of your monthly mortgage payment in an escrow account that will be used to cover property taxes and other expenses. It’s a great way to make sure you always have the funds available to pay these expenses so you don’t end up with a lien against your property.

What is an Escrow Company?

Because of the sensitive nature of holding funds and documents, most states require a license of some kind to operate as an escrow agent. In states that don’t, regulators oversee the activities of anyone providing escrow services. An escrow company can consist of a single licensed individual, like when a real estate agent provides escrow services, or of an entire team, like the one at World Wide Land Transfer.

Regardless of its size, an escrow company can perform all the following services – and some others – for you as a buyer, seller, or real estate agent:

-Serve as a neutral third party to facilitate real estate transactions.

-Accept earnest money from the buyer to show their commitment to buying the property.

-Request a title report to determine if the property can be sold legally. At WWLT, we are also a title insurance company, so we can perform the title search in-house.

-Prepare escrow instructions that will dictate the timing and circumstances under which documents and funds will be transferred.

-Receive documents related to the transaction, including loan documents and proof of homeowners insurance.

-Request and receive loan funds from the lender.

-Disburse funds according to the terms of the settlement agreement.

-Pay title insurance premiums, fees, commissions, and other expenses from the relevant party’s escrow account.

As you can see, an escrow company provides a wide range of services, and it’s important to find one you can trust. In title insurance company in PA, the buyer usually chooses the escrow company that will be used; in many other states, the seller chooses. No matter where you live, the party that chooses the escrow company may be up for negotiation. Your real estate agent or mortgage company may suggest an escrow company, but keep in mind that the choice will ultimately be made by either the buyer or the seller. Rather than allowing an individual escrow agent to handle your account – especially if your real estate agent provides their own escrow services – we suggest shopping around for a company that will be truly neutral, and that has the staff and the experience to provide you with the best customer service.

Get in touch with World Wide Land Transfer for Colorado escrow and title services, or if you need an escrow company anywhere else in America. We have been providing escrow services for more than 20 years, and our stellar track record of excellent customer service means we will always be there to answer your questions. 

World Wide Land Transfer is a service-oriented PA title company with offices in Philadelphia, New York, and Washington, D.C. With a record of going above and beyond, we are trusted to close everything from complex commercial transactions to residential refinance and purchase transactions.