by Brad Pauly
on Friday, June 25th, 2021 at 9:00am.
For first time home buyers, the escrow process can be confusing. With so much jargon and information regarding your new purchase, you may not entirely understand what is happening when you buy a house for the first time. Among these confusing aspects of purchasing a house is the process of being in escrow. Being in escrow occurs in between the time a seller accepts an offer, and the buyer receives the keys to the newly purchased home. In this post from the Pauly Presely blog, we’ll give you a high-level overview of the escrow process, and what you should expect when you’re in escrow.
Opening An Escrow Account
When the seller and buyer come to an agreement on the sale of a house, the purchaser's money will be deposited into an escrow account by a title agency. The title agency that will collect the money should be specified within the purchase agreement.
Escrow accounts are managed by a third party outside of the buyer and seller, and they can hold onto different kinds of valuables. In the regards to the sale of a house, the bank will hold the deed to the house, while the money used to purchase the house will be held in an escrow account by the title agency. Escrow providers for real estate transactions will almost always be title companies. Escrow accounts are used to ensure that both the buyer and seller are upholding their end of the purchase agreement and the use of an unbiased party is historically the best way to do this.
Before the sale can go through, the mortgage company will perform a property appraisal. In most cases, the purchaser will pay for this appraisal. This appraisal is performed by a third-party, and is to protect the lender’s financial interests in the event that the property is ever foreclosed on.
If the property is appraised at a lower price value than the sale price, the buyer can make up the difference in cash, the seller can reduce the sale price to the appraisal value, or the seller and buyer can negotiate a price between these two extremes.
If the seller’s agent or buyer’s agent has comparable sales data that the appraiser didn’t know about, then the appraisal performed by the lender may be swayed. In most cases, purchasers can’t do much to change the appraisal given to a property. In the event the appraisal process doesn’t work out for you, you can always cancel your purchasing contract.
Escrow & The Closing Process
There are other steps in between the lender’s appraisal and the closing, like purchasing insurance and title reports, but when you go with a trusted real estate agent like Pauly Presley Realty, most of this will be handled by the broker. The closing process is one of the most involved for both the purchaser and the seller, and includes tons of paperwork that must be filled out by both parties. After the closing process, the escrow officer will prepare a new deed naming the seller as the new owner of the home, and send this to the county recorder. Once that’s been completed, the purchaser is now the owner of their new home.
Need Help Navigating The Home Purchasing Process? Pauly Presley Realty Can Be Of Assistance
Purchasing a home for the first time can be tough, especially in a competitive market like Austin, Texas and the surrounding areas. If you’re looking to purchase a home in Austin, San Antonio, or anywhere else in the Central Texas area, trust the real estate brokers at Pauly Presley Realty to help. We’ve navigated thousands of purchase contracts for homes in Central Texas, and have tons of experience in dealing with the escrow process. To learn more, give us a call or contact us online.