Frequently Asked Questions
1. Why is a "refundable pad" listed on my estimated closing statement?
The amount of funds requested from a Buyer for closing is based on the most current information available to the Escrow Officer at the time the file is figured. If the closing date changes or fees are revised, the Escrow Officer must have sufficient funds in the escrow to make adjustments and to pay all the closing costs. A "refundable pad" or "buffer" is used in making these final adjustments, and all unused money is refunded to the Buyer at close of escrow.
2. After the Buyer signs the loan documents, when will the escrow close?
The closing date is established by the parties and stated in the Purchase Contract. Typically, the escrow will close 3-5 days after the Lender has received the signed loan documents. During this time, the documents are reviewed by the Lender, and the loan funding is scheduled. The Escrow Officer will work closely with the Lender to coordinate the scheduling of these final details.
3. When can the Buyer receive the keys and who will provide them to the Buyer?
When the Escrow Officer confirms that the recording is completed, the Real Estate Agents are notified and the keys can be provided to the Buyer by their Agent.
4. Why can't the Escrow Officer accept a personal check at the time of closing?
An Escrow Officer is only allowed to close an escrow when all deposited funds have been collected or cleared. Deposits by personal check are subject to clearance and verification of payment by the financial institution on which the funds were drawn. The check clearing process may be delayed one (1) to ten (10) business days if the check is drawn on an out-of-state bank. The Escrow Officer will request closing funds in the form of a wire transfer or cashier's check in order to prevent closing delays.
5. What should the Buyer bring to their document signing appointment?
The Buyer must present identification in a form acceptable to the Notary Public. The identification must be current or have been issued within five (5) years. Common forms of acceptable identification include:
An Identification Card or Driver's License issued by the California Department of Motor Vehicles
A Driver's License issued by a state other than California or by a Canadian or Mexican public agency authorized to issue drivers' licenses
A passport issued by a foreign government
A passport issued by the Department of State of the United States
An identification card issued by any branch of the armed forces of the United States
6. When should the Buyer deposit their closing funds?
The Buyer's funds in the form of a wire transfer, cashier's check or official check must be deposited in escrow 24 hours prior to authorization of recording with the title company.
7. At closing, when can the Seller expect to receive the net proceeds?
Once the recording is completed, the Escrow Officer must wait for written confirmation that the Buyer's loan proceeds have been received by our Bank.
If the Seller requests the net sale proceeds in the form of a WIRE, it will be sent on the next business day after this information is received.
A standard trust accounting check can be issued on the same day that confirmation is received from our Bank.
Escrow 101 - Opening Escrow
Actions you can take to quick start the opening process
During the earliest days of the escrow process, there are actions both Buyers and Sellers can take to ensure the transaction gets off to a smooth start. This month, we provide some simple, effective tips, which can really make a difference.
Tips for Both Parties:
When you receive your escrow instructions, read and understand them. Call your escrow officer or real estate agent if you have questions. Promptly sign and return the instructions and other forms provided by your escrow officer. Tell your escrow officer if you plan to be out of town during the escrow period or if one party will be signing documents using a Power of Attorney.
Let your escrow officer know if the escrow is part of a 1031 tax-deferred exchange and provide the name of the Qualified Intermediary, if any.
Be responsive to the requests of your agent, lender and escrow officer. Remember, they are working together to close your escrow smoothly and on time.
Special Tips Just for Sellers:
Talk to your escrow officer if you are in the process of divorce, if a spouse has recently died, or if you have specific instructions covering the disbursement of your proceeds, such as a wire transfer.
Remember to keep the payments on your existing loans current during escrow. Regarding property taxes, talk to your escrow officer if a payment becomes due during your escrow period. He or she can give you advice about ways to avoid double payments or "holds" on your funds at closing.
Tell your escrow officer if you are involved in negotiations with your existing lenders (for example, delinquency issues) or legal or estate proceedings which might affect the property, such as a probate sale.
Be sure inspections or repairs are ordered quickly. Coordinate this process with your agent and plan to make your property readily available for inspectors or appraisers, which may be requested by the Buyer or his agent.
Special Tips Just for Buyers:
Provide the name of your new lender to your escrow officer as soon as possible and cooperate with the lender by promptly providing requested information. Obtaining loan approval is usually the most time-consuming part of the escrow process, so early attention to this will be helpful.
If fire insurance for your new property is not provided by the homeowner's association, contact your insurance agent and provide that agent's name and phone number to your escrow officer.
Advise your escrow officer if your closing funds are coming from a stockbroker or another country.
If you will be unable to sign loan documents during normal business hours, your escrow officer will appreciate knowing this in advance.
These tips will help you avoid unexpected surprises that can cause a delay in your escrow closing. Your escrow officer is an excellent resource if you have questions or concerns, and you are encouraged to call any time.
Escrow 101 - Preparing for Closing
The final days before the closing of escrow are by far the busiest for the escrow officer and all other parties. At this point, all property disclosures have been delivered, any contingencies to the sale should have been satisfied, and the escrow officer has gathered most of the documents required to meet all closing requirements. Buyer and Seller may be making moving plans and the anticipation is mounting.
The announcement that the Buyer's new loan has been approved is usually the "trigger" that puts the last steps into motion. Here is a brief description of the activities your escrow officer performs to prepare for The Big Day:
Order loan documents for the Buyer
Complete a full audit of the escrow file to make certain that all requirements are met
Arrange for the loan documents to be signed
Forward all documents which must be recorded to the title insurance company
Order the Buyer's insurance policy
Return signed loan documents to the lender
Complete final lender requirements
Receive final deposit of funds from the Buyer
Request loan funds from the lender
Advise the title company that it can proceed with recording
It is not uncommon for the escrow officer, lender, or title company to encounter one or two last-minute details which must be handled prior to closing. The Seller and Buyer can be of great help by making themselves available during this final week for clearing up these details and for signing any documents which might be needed. With moving plans underway and busy schedules, this isn't always easy. Your escrow officer and real estate agent recognize this and will be working hard to minimize any inconvenience.
Keeping communication lines open will help ensure a smooth closing. General questions about the closing process are best directed to your escrow officer. If a Buyer has a question about his financing, he should contact his lender. Any issues relating to the property itself, including move-in dates or condition of the home, can be handled by your agent. A team of experienced real estate professionals and a cooperative Seller and Buyer are a winning combination as the transaction moves to its conclusion.
Short Sale Transactions: A Primer for Realtors and Sellers
The real estate market runs in cycles. Presently, we are in an economic period in which mortgage delinquencies are on the rise. The primary cause of this is the combination of higher interest rates on mortgages and a slowdown in residential real estate sales. Some homeowners with adjustable interest rates are particularly stressed as their payment amounts increase, stretching their budgets to the limit. In this climate, we can anticipate seeing more foreclosures, "distress sales", and short sales. The information in this primer will help you understand the short sale and how you can prepare for this transaction even before you begin the escrow process.
What is a Short Sale?
This term refers to a transaction in which the sales price will not generate enough money to cover the payoff of the Seller's existing loan and closing costs. Working with a willing Lender, a Seller may be able to negotiate a payoff amount, which is less than the actual amount that would ordinarily be required to payoff the loan. The lender agrees to accept the equity available in the property, and the Seller receives no proceeds from the sale of the property.
Why would a Lender or Seller find a Short Sale appealing?
Homeowners benefit by avoiding the long-term negative consequences to their credit, which are associated with a foreclosure. Lenders benefit because they can avoid the substantial expense of a foreclosure proceeding. Most lenders do not want to own the properties used as collateral for their loans, because the maintenance costs and taxes add to their cost and decrease profitability.
Note: The information is intended to present general guidelines and is not a substitute for personalized financial advice. Always consult with a tax advisor or legal counsel before entering a Short Sale transaction.
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