While recent times have been different because of the COVID-19 pandemic, there are usually over 5 million homes sold in every 12-month period in the United States.
If you’re buying or selling a home in the near future, there is some terminology you’ll have to get used to. Real estate title and escrow are two key concepts you’ll have to become comfortable with.
Real estate title is a way of figuring out who owns what when it comes to property. Escrow is a means of transferring payments between parties safely.
To learn more about real estate title and escrow and how each one might affect you, keep reading.
Real Estate Title and Escrow: What’s the Difference?
Real estate title and escrow are often mentioned and explained at the same time. However, they are distinct concepts with different functions.
The connection between title and escrow comes from the agents that provide the services. Title and escrow agents generally provide homebuyers with both.
We’ve taken a closer look at both real estate title and escrow in the paragraphs below.
Real Estate Title
Real estate title is the concept used to assign ownership to one party or another in matters of property. This can get quite complex, as there are often disputed items in property titles, especially with larger properties.
The title company role is of vital importance here. Agents must work hard to make sure that the ownership of everything important is clearly set out so that there is no confusion when it comes to purchase and sale.
Escrow
An escrow is a type of third-party arrangement in which funds are held until deals become final. The buyer pays their money into the escrow account, and once they are satisfied that the seller has held up their end of the bargain, the escrow account holder releases the funds.
The escrow account holder may have to distribute funds to several different parties, including realtors. They usually take out their own fee as well.
Generally, those that take care of real estate title will provide escrow account services as well.
How Title and Escrow Work Together
Real estate title and escrow may be different, but they each play key roles in the same process. You need an agent capable of providing both services to ensure that your property transaction takes place as efficiently and safely as possible.
Understanding Key Terms to Close Out Your Next Property Deal
Real estate title and escrow can be difficult concepts to get your head around if you have no prior exposure to the world of buying and selling property. However, once you know what they mean and how to use them to your advantage, you’ll be in a much stronger position moving into your purchase or sale.
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