When you’re buying or selling a home in Aspen, you’ll hear the term escrow – and if you’ve never been part of a real estate transaction before (or even if you have), it’s a good idea to familiarize yourself with what it means.
3 Things You Need to Know About Escrow When You Buy a Home for Sale in Aspen
Escrow is safekeeping. It’s a contractual agreement by which a third party – typically an escrow officer – maintains money and important documents until your real estate transaction is complete. When you close on a home, escrow gets closed, too.
Here’s what you need to know:
- Escrow uses a third party who is not part of the transaction
- Escrow will cost you
- Escrow protects you during the transaction
Here’s a closer look at each.
#1. Escrow uses a third party who isn’t part of the transaction.
An escrow officer doesn’t have a vested interest in your real estate deal. In fact, it’s probably going to be someone from the real estate closing company, a title agent, or even an attorney. This person is there to make sure the transfer of money and documents happens when it’s supposed to happen.
#2. Escrow will cost you.
Escrow services usually cost between 1 percent and 2 percent of the total value of the transaction.
#3. Escrow protects you during a real estate transaction.
Escrow protects you during a real estate transaction because the escrow officer won’t transfer any funds until it’s okay to do so.
Here’s an example:
You offer to buy a home and the seller accepts. You have the home inspected and discover that the roof is leaking. You ask the seller to repair it, and the seller agrees. You do your final walk-through of the home on the morning you’re supposed to close and discover that the roof hasn’t been fixed at all. The escrow officer won’t give the seller a dime of your money until the problem is resolved.
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