First, a little about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is used to assure your property closes on time and the process goes smoothly. Escrow companies hold money for "safe-keeping" in a deal between a buyer and seller. For example, in an online transaction, PayPal is the secure third party that obtains the buyer's cash, and then disburses the payment to the seller.
Tying up any loose ends like taking in funds, finishing forms, getting the documents for loans and liens, and assuring you get a spotless title to the house before your purchase gets finalized are all parts of closing in which an escrow agent is useful.
These are the documents that escrow agents usually look to collect:
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
Upon finishing of all instructions of the escrow, closing can take place. All debts and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). The house's title goes to you and title insurance begins per the steps of your particular escrow agreement.
At the close of escrow, fees are paid in an acceptable form to the escrow. As your agent, I'll let you know what is an acceptable way of paying.