Posted December 27, 2021 in Real Estate Terms
Many have heard of escrow before in reference to buying or selling a home in Henderson, but what is escrow? What happens in escrow? Many may also wonder why it takes so long in the United States to transfer home ownership from one individual or company to another. Below we’re going to let you know what escrow is, what needs to happen during escrow, and why it takes sooooo long.
First, escrow is simply the carrying out of the purchase contract by an unbiased 3rd party. The real estate agent will take the purchase agreement after both the buyer and sellers agree to the terms and conditions of the sale and send it to the agreed-upon escrow company/officer. Once your escrow officer receives the contract, they will open escrow and carry out the purchase contract until escrow is complete.
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During escrow, the escrow officer will ensure that the contract is carried out. If the purchase contract is not followed in the given time that escrow is supposed to last (according to the purchase contract) escrow will be extended or the Henderson home buyer and seller will have to negotiate alternate terms. Escrow also makes sure all the proceeds from the sale get dispersed in the correct amount to the seller, the agents, the title company, and more.
The reason why escrow can take so long is that there usually has to be an appraisal and an inspection. If you are purchasing a home in Henderson with cash, you won’t need an appraisal or lender participation which will allow escrow to be a much shorter amount of time – sometimes only a few days. On the other hand, if you are purchasing a short sale or a foreclosure you will have to deal with the seller’s lenders and their short sale department(s), which can make the process take months. Many traditional listings will have about a 45-day escrow, but the time period is completely up to the buyer/seller and how long it will take to carry out their purchase agreement. It is not unusual to extend escrow to give certain parties more time to complete the purchase contract.
The appraisal is for the company lending the buyer money to purchase the home to verify that the home is worth what they are lending the buyer. If the appraiser thinks the property is worth less than the agreed upon in the purchase agreement or purchase contract, the bank will lend the buyer what the appraiser thinks it’s worth. If that is the case, the buyer will have to try to negotiate a lower price with the seller at that point OR will have to make up the difference out of their own savings. If the appraiser thinks that the agreed-upon price is correct or if the house is worth more than the agreed-upon price, the loan company will then prepare the documents and funds needed to purchase the home.
The inspector will do a thorough walkthrough of the home during escrow to check and see what is wrong or could potentially go wrong with the home. This is so the buyer is informed of what exactly they’re buying. If the inspection shows major, non-cosmetic problems, the buyer can request repairs be made by the seller before escrow closes and the buyer and seller can negotiate those requests. While inspections are not always mandatory in a sale, it is really a wise thing to have done and often real estate agents encourage their clients to have a clause in the purchase contract that allows for negotiations for repairs after the inspection has occurred. Once the inspection is done the home inspector will send a report so the buyer can use that to negotiate and show proof that there is a problem.
If you would like to have your Henderson real estate questions answered, contact Nevada Desert Realty at 702-509-1446! We can answer your questions and provide a complimentary buyer or seller consultation where we’ll walk you through all the Henderson real estate terms you need to know!