Escrow... is that a real word?
Escrow? Is That Even a Word?
Escrow payments. Also known as a good-faith payment. These are defined as a legal arrangement in which a third party temporarily holds large sums of money or property until a particular condition has been met (e.g., the fulfillment of a purchase agreement). For our purposes, we are talking about large sums of money.
Now don’t get scared, we’re not talking about $100k+ here, we are talking about $2,000 to $5,000 (depending on the price of the home). When we put in an offer on a home, we include an escrow payment in the contract. I like to keep it to a smaller number to safe-guard my clients, but I have been involved in some transactions where the buyer puts $14,000 into escrow. Good for them! More power to them! That was their choice.
This escrow payment is deposited, within 3 days, into the account of the Title Company.
*If you are a seller, you get to choose your title company (in which case, we work with some great Title Companies here in Orlando)*
The title company holds this money in their separate account for future use for the buyers closing costs. The money just sits there, sometimes collecting interest for the title company, in your name, waiting… Waiting until it’s closing time. Then that money comes back and is put towards your closing costs. Seeing that again is like seeing a friend you haven’t seen in over a year! Great feeling!
On the seller side, the escrow payment aka “good faith payment” will show them how serious the buyer is with buying the house. If you are selling your $300k house, and a buyer puts $6000 into escrow, that shows they are serious and are willing to put up $6000 of their own money to secure the sale of the home.
On the flip side of that scenario, true story, if you are selling your $300k house and the buyer puts $300 into escrow, yes three hundred dollars, it shows that they are either NOT serious enough or just don’t have the cash flow at the time, which is another can of worms, to make it a serious transaction.
Matt Schnitker is a Realtor® in Orlando, Florida with BEX Realty. I'm a proud husband and father of two, self-professed tech nerd, and bona fide food fanatic. My wife and I are both Real Estate nerds and we love looking at Real Estate, so of course, we got into the business together. 😆
If you have any questions or would like some more information on anything you see in my videos (or anything else) please email me at matts@BEXRealty.com or call my team at 407.415.1015
We have a website with tons of blogs and videos and you can search for homes for sale: www.SoldBySchnitker.com
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