The escrow period usually refers to the time between a seller accepting an official offer to buy a home to the time the house key transfers hands. Deposits will be held by either the real estate brokerage or the lawyer handling the sale. The seller will receive the money when all previously agreed upon obligations have been met. Some escrows are smooth sailing, but most have at least a few obstacles along the way. Use this guide to understand the rules, set expectations, and think a few steps ahead.
Stay in Touch
There will be a lot of people involved during a home's escrow period, which means buyers may have to act like the proverbial squeaky wheel. Hopefully, the primary real estate agent can answer many of their questions, but buyers should also be familiar with the attorney and/or title company handling the official home documents. If the buyer and seller made certain contingencies upon move-in, these need to be clear to those reviewing the paperwork for the first time. Buyer should feel comfortable requesting clarification or explaining potentially confusing clauses, which works best when they have an established relationship with the powers that be.
Straighten Out Finances
The purchase agreement should specify how much money is owed and where it needs to go. Land transfer taxes, attorney fees, and closing date adjustments are all costs that buyers should understand to ensure they have the funds ready to close on the home. If the buyer is using money from an RRSP account, they'll need to begin the transfer process a full month before the anticipated closing date of the home. Buyers should also be in touch with their lender during this process because the official amount a buyer receives can vary based on the lender's appraisal. If the appraiser finds the home to be worth less than the buyer paid, the lender may adjust the amount before closing day.
Search for Insurance Early
Home or mortgage insurance companies should be contacted well before the keys ever transfer hands. They'll need time to conduct their own inspections, so they can set the premium on the home. Buyers should brace themselves for a higher monthly payment if they're moving to a home with outdated electrical wiring or one in a less-than-desirable section of town. Starting early not only gives new homeowners an opportunity to budget, but it also gives them a chance to price shop to find the best possible provider. If the seller was supposed to make improvements to the property, make sure these improvements are done before the insurance inspector swings by the home.
Be Prepared to Negotiate
As painstaking as negotiation may be to some buyers, escrow is a crucial period for a buyer to get what they need from the seller. Buyers have the right to ask for a lower purchase price if their home inspection unearthed a major flaw. The sellers also have a right to correct the issues prior to the buyer moving in. So if the seller's ex-spouse is claiming ownership of the property, the seller has time to settle this dispute so the buyer doesn't have to worry about a legal battle after moving in. It should be noted that buyers should use this advice in moderation. Excessive demands on the buyer's end can lead to the sale being canceled entirely—which means the buyer has to start from scratch.
Be Proactive In Fulfilling Contingencies
Contingencies in contracts can be made by both buyers and sellers. For example sellers may require a set amount of financing to be in place as a contingency, while buyers often have their own concerns. For example, the home doesn’t have a clear title or unknown damage is discovered during an inspection, contract contingencies can be included. The key for sellers is to resolve any contingencies as proactively as possible.
Troubles with a clear title can arise for any number of reasons, but as long as the home is validly owned by the seller clearing the title quickly shouldn’t be an issue—especially with a lawyer or realtor backing the sale. If potential buyers have made repair requests, take action right away to get the work performed or negotiate a reduced price to cover repairs.
Once the determined real estate contingency period has been declared to both parties, sellers have those set number of days to meet those obligations and submit proof to the buyers or their agent. Because these deadlines can be short and often buyers can lose interest in the property, being proactive in fulfilling contingencies can make or break the deal.
Tie Up Loose Ends
Make sure all relevant organizations are aware of the move before taking control of the new property. Any services the home needs (e.g., internet, alarm, cable, etc.) should be established during escrow. Buyers should also do a basic inspection of their appliances and home systems before taking control. Plumbing that worked during the inspection may have suffered a setback in the days that followed. Buyers will have the right to claim repairs from the seller as long as they can identify the problems before they officially gain control of the property. Finally, buyers should be prepared to experience delays for any or all of these actions. From nasty weather to illness, there plenty of reasons why timelines may need to be adjusted.
There's no way to eliminate every potential catastrophe during escrow, but there are ways to mitigate the severity of time delays and hassles that can be common during this eventful time. Those who understand the process have a better chance of knowing who to consult when there are hiccups and having the tools they need to check off every step on their list. The above facts are just a base for West Calgary home owners to use to get their own escrow period under control.