Six Steps to a Successful Escrow

1. PURCHASE CONTRACT

The Arizona Association of Realtors (AAR) created a contract that is used in place of our escrow instructions and it is important to ensure the following is fulfilled:

  • Copy of contract signed and dated by all parties
  • Legible copy
  • Addendums (including Loan Status Report, HOA/PUD Addendum, etc. upon opening escrow)
  • Counter offers
    • Complete addresses for Seller and Buyer
    • Current addresses
  • Work addresses as well as home (mailing)
  • Addresses that will be used for buyers and sellers after close of escrow
    • Correct legal description
    • Lot number
    • Subdivision
    • Parcel number
    • Street address
  • Mobile Home
    • Affidavit of Affixture
    • Certificates of Title
  • Check for Earnest Money deposit

2. PERTINENT INFORMATION

  • Where do we get information on commissions?
    • Copy of Listing Agreement
    • Percentage of commission and how it is to be split
    • Name, address and phone number of cooperating Broker/Agent
  • Existing lender information
    • Company name, address and phone number
    • Account number
    • Contact phone number
  • New lender information
    • Company name, address and phone number
    • Name and number of loan representative
  • Type of loan
    • Assumption
      • Assumptions – if balance to be assumed is different than contract, other figures will adjust accordingly
      • Prorations
        • Impound account assumed by buyer?
        • Lender has the account
        • Is it with or without prorations?
    • FHA
    • VA
    • Conventional
    • Carryback
      • Length of term
      • Amount of payment
      • Interest rate
      • Due on sale?
      • Unusual terms
        • Balloon payments
        • All upon principal
        • Interest first, balance on principal
    • Late charges
      • Percentage of payment
      • Flat dollar amount
      • How many days?
    • Release provisions
      • A portion of the property released upon certain provisions
    • Deed of Trust
      • Concurrent payments
      • Wrap
        • Underlying lender name
        • Loan number
    • Additional payoff
      • Name and address of creditor
      • Account information
    • Insurance information
      • Name and phone number of current agent, if being assumed
      • Name and phone number of buyer’s agent
    • Homeowners Association
      • Name of company
      • Contact name and phone number
      • How much and how are dues to be paid?
      • Blanket policy of insurance
      • Disclosure fee and transfer fee – who pays?
    • Home Warranty
      • Copy of contract
      • Amount of premium
    • Inspections
      • Under new contract, part of the ten (10) day inspection period

3. KNOW YOUR BUYERS AND SELLERS

  • Buyer
    • Impending marriage
      • About to become married?
      • Additional documentation may be needed
    • Is a Trust involved?
      • Most Lenders will not loan to a trust
    • Buyer using a Power of Attorney?
    • Must be witnessed
      • Provide Original to Escrow ASAP; Title Dept. must approve & will need to be recorded unless previously recorded
    • Make sure spelling of all names is correct
  • Seller
    • Double check vesting deed
      • Are any of the sellers deceased?
        • Has probate been completed, if needed
    • Additional documents may be needed
    • Death Certificate
    • Are Sellers divorced?
      • Already divorced?
      • In the process of a divorce?
    • Additional documentation may be needed
      • Quit Claim Deed and Authorization to Record from disclaiming spouse
    • Was Seller single when property was purchased?
      • Additional documentation may be needed
    • Is Seller vested in a Trust?
      • Copy of trust may be required by title
        • Front page showing name of trust
        • Pages showing Powers of Trustee
          • Transferring
          • Encumbering
        • Signature pages with notary acknowledgment
        • Amendments, if any
  • Seller using a Power of Attorney?
    • Must be witnessed
    • Provide Original to Escrow ASAP; Title Dept. must approve
      • Will need to be recorded unless previously recorded
    • Make sure spelling of all names is correct
  • 1031 Exchange
    • Seller – provide Escrow with name and contact information for Exchange company
    • Buyer– provide Escrow with name and contact information for Exchange company

4. CLEAR INSTRUCTIONS

  • Make sure all “additional instructions” are clearly explained.
  • Earnest Money
    • Early Release Provisions prior to close of escrow
    • “Down Payment” versus “Earnest Money”
      • Be consistent with language
  • Buyer Inspection Notice and Seller Response
    • Buyer only gets “one chance” to list everything under “Buyer elects to provide
    • Seller an opportunity to correct the disapproved items”
  • Communication with Your Escrow Officer
    • Any Addendums created after escrow is opened, promptly deliver to Escrow Agent
    • Reply to inquiries from your Escrow Officer
      • E-mail
      • Fax
      • Phone

5. OBTAINING SIGNATURES

  • Will your clients be coming to the escrow office for signature?
    • Appointment should be made
    • Do you wish to be present?
  • Mailing documents
    • Correct mailing addresses are essential!
    • Overnight?
      • No P.O. Boxes
      • Physical Address

6. RELATIONSHIP WITH YOUR ESCROW OFFICER

  • Know your officer
  • Keep Escrow Officer informed of your expectations and progress throughout escrow
  • Build a team