Why San Diego Buyers and Sellers Benefit From an Escrow

Holding items in escrow is a common occurrence during a San Diego home sale. However, many people do not know what it means.  

To hold items like contracts or even earnest money there is a designated place called an “escrow” where they are held until a sale has been finalized.  Using this will help to protect the San Diego buyer and seller in the event something goes wrong with the sale.

Escrow Details

No party is responsible for the escrow.  Instead, a third party individual will hold these items until the sale is complete.  This individual is usually an attorney or the company that is handling the closing of the sale.  They are entrusted to keep all items from either party until the sale is finalized.

There are many steps in buying a San Diego house that take place in between making an offer and closing.  Each of these steps will require documentation and this must be recorded with the escrow holder. As inspections, appraisals, and negotiations occur these documents need to be updated and given to the escrow holder.

After the many steps are taken to come to an agreement, the closing process can start.  At the end of the closing process, the escrow holder can clear the title to show that the sale has been finalized.  This is the moment that new owner takes possession of the San Diego home.

The Cost of Escrow

The protection that using an escrow provides is well worth the cost.  However, it is up to the San Diego buyer and seller to determine who pays for this service.  The buyer or seller can pay or they can share the cost. On average, it will be about two percent of the cost of purchasing the San Diego home.

Why Use an Escrow

The true value of the escrow comes into play if there is a problem with the buyer or seller’s situation.  Not all parties abide by their agreements and without using an escrow either party could be out money they could have saved.

For example, a San Diego buyer may use contingencies in align with their inspection.  If there are any problems with the house that the seller then agrees to fix, they must make the needed repairs.  In the event, the buyer sees that the repairs were not completed, the seller will not receive the money that they are owed until they make due on their promise to fix the problem.

Likewise, the San Diego seller does have some protection if a buyer flakes out on their deal.  A buyer can back out of a deal if they have a contingency that stipulates they can do so in the event of an inspection or appraisal coming back with poor results.  If the buyer chooses to back out of a deal without reasoning, the seller can still collect on their earnest money deposit.

There is a major benefit to using an escrow.  There is no reason to avoid this because it can save both parties a lot of money in the long run.  Without an escrow, each party is trusting a stranger with their money or documents. In many cases, neither party is trying to cheat the other one but it is nice to know there is an unbiased individual protecting sensitive items during the transaction.