Getting your ducks in a row for a smooth escrow closing
Closing on a home can be an exciting and stressful process all at the same time. With so many potential speed bumps it’s important we make your closing flow as smooth as possible. At Ticor we believe one of the easiest ways to accomplish this is by educating buyers and sellers as they prepare for the big day. In particular we’d like to highlight some of the simple steps a buyer/seller can take to expedite the process. We call these steps the “Keys to a Successful Closing”.
Prior to Closing
- Check that all conditions have been met by your Loan Officer.
- Send the names of your lender and homeowner’s insurance company to your Escrow Officer.
- Gather the following and deliver to your Escrow Officer:
- Your forwarding address
- Any existing mortgage information
- Identify leased equipment
- Homeowner Association information
- Utilities (if they are to be paid out of escrow.)
Buyers and Sellers
- Confirm with your agent that all contingencies have been satisfied.
- Keep your agent informed of any vacation plans or times you will be unavailable.
- If you plan to have your documents reviewed by an attorney, please notify your Escrow Officer at least 48 hours prior to signing.
Before Your Signing Appointment
- Expect to sign at the escrow company one or two business days before the closing date.
- If funds are required to close, be prepared to bring the monies in the form of a cashier’s check 24 hours before recording or wire transfer the same day as closing.
- Have a valid photo identification available at your signing appointment: Driver’s License/State ID, Passport, or Green Card.
- Expect the signing to last approximately one hour if you are the buyer and 30 minutes if you are the seller.
If you have questions or comments about the closing process, please share by commenting below!
When purchasing your first home, the escrow process can be a little confusing. Buyers and sellers may find themselves asking, “What is escrow and why is it needed?”
With that in mind we’ve formulated a brief synopsis of the escrow process in plain english.
An Unbiased Third Party
When buying or selling real estate, escrow is often opened for protection and ease. The escrow agent is setup as a disinterested third party and performs mulitple tasks, as directed, by the parties involved in the transaction. Some of these items include, holding of legal documents, disbursement of funds on the buyer or sellers behalf and distribution of funds in accordance with the instructions set forth by the buyer and seller. Both the buyer and the seller rely on the escrow holder to fulfill the intention of their instructions with consistency and in good faith.
The convenience provided by the escrow holder is realized by buyer and seller due to the fact that both parties can move forward independently, but in parallel to close the transaction. The idea is such that either party can submit inspections, loan commitments, funds, deeds and other items pertinent to the transaction’s closing. When all insructions are in order and consistent, escrow facilitates a seamless closing.
Summary: The Purpose of Escrow
The process of escrow was established to facilitate the purchase and sale of real estate. Here’s a brief outline of the escrow holder’s duties in a transaction:
• Act as the impartial “stakeholder,” or depository of documents and funds
• Process and coordinate the flow of documents and funds
• Keep all parties informed of progress regarding the transaction
• Respond to lender requirements
• Secure title insurance policy
• Obtain approval of reports and documents from the parties as required
• Proration and adjustment of insurance, taxes, rents, etc.
• Record the deed and loan documents
• Maintain security and accountability of monies owed and owing
Do you have questions or comments regarding the escrow process? Please share below.
Real Estate Owned transactions are much more common now than in recent years. And if you’re a Real Estate agent in the Seattle area, chances are you’ve been doing your homework on how to make these types of transactions flow better for everyone involved. Our escrow team has put together a few tips that will help:
The Seller requires the Buyer’s name(s) to appear on the purchase and sale EXACTLY how the vesting will be displayed on the ensuing Deed.
If there is a discrepancy between the two, the Seller will require an addendum to rectify this discrepancy. This can save a ton of time in the beginning portion of the REO Process and help eliminate future delays in closing.
Always review the Seller’s “Counter Addendum” to avoid surprises.
Escrow reviews the Counter Addendum for instructions regarding the closing. Some things we normally see addressed are: Closing extension fees, max seller paid closing costs, excise tax, actual closing dates, “property as is” clause, utilities ‘not’ paid through closing, etc.
Click the image above to download 4 hot tips for REO closings.
Remind your Buyers that their Lender’s delivery of Loan Documents is the beginning of the final stage of closing.
This means Escrow absolutely needs the Loan Documents to generate a HUD for the Buyer’s Lender to approve. Consequently Escrow cannot send a HUD for the Sellers approval until the Buyer’s Lender is satisfied with the Buyer’s portion of the HUD. This is different than your standard transaction where your seller can sign ahead of time.
Depending on the Seller and their processing time frames; reviewing, signing and returning the Seller Approved/Signed HUD can take anywhere between 24-72 hours.
What this means is the Buyer’s Lender cannot fund the transaction until they have a Seller Approved HUD, even if Escrow has signed and submitted the Buyers funding package to the funding department. This is a commonly misunderstood portion of the process and can help set Buyer expectations in the final days of closing. It is best to plan for the full 72 hours anticipating any last minute delays from the seller.
How about you? Do you have questions or feedback regarding the REO closing process? Please leave a comment below!
REO (Real Estate Owned) properties make up a significant portion of the inventory in the Puget Sound real estate market. As a reality of the current real estate industry REO transactions draw plenty of confusion and frustration for many who are involved. Here at Ticor we’ve been handling a steady volume of REO properties and deal with some large REO accounts. Based on our experience with REO transactions we’ve produced the following outline.
Please understand the REO process described below represents an “average” experience and just like any real estate transaction many factors can affect time frames and conditions. For more details, click the following link for hot tips on working with escrow on an REO closing.
The Beginning – Mutual Acceptance
The beginning is signified by mutual acceptance of the Purchase and Sales Agreement
||Escrow is opened and Title is OrderedEarnest Money is deposited
||Deed is prepared and sent to SellerBuyer’s vesting info is taken from the purchase contract, if incorrect the Seller will request proper vesting and an addendum will be required
Buyer’s Lender requests fees from Escrow
Escrow orders HOA, Lien Demands and other money matters associated with the property
||Seller will begin requesting weekly status updates from Escrow regarding specifics like the appraisal, inspections, earnest money deposits, underwriting criteria for buyer’s lender, etc.
The Middle – Underwriting (10-20 Business Days)
For the next 2-4 weeks the Buyer’s Lender will work on underwriting the loan for the transaction and await approval to move forward.
The End – Closing Process (3-7 Business Days)
||Buyer’s Lender delivers loan documents to EscrowEscrow completes an estimated HUD and sends to Buyer’s Lender for approval
||Buyer’s Lender approves estimated HUD and notifies EscrowUpon Lender HUD Approval, Seller’s HUD is sent for signature
Schedule Buyer to sign loan documentation
||Signed Buyer’s documents are received back at EscrowFunding Package is assembled and sent to Buyer’s Lender for final funding approval pending Seller Signed HUD
Seller Signed HUD is received by Escrow and forwarded to Buyer’s Lender to accompany the Funding Package
If the Buyer’s Lender is satisfied with the funding package and conditions the transaction will fund, the Deed will subsequently be recorded and the transaction will close.
Questions or thoughts? Please leave a comment below!
A closing protection letter (“CPL”) is a written indemnity agreement requested by a lending institution or bank (“lender”) and issued by the title insurance company (“underwriter”) that will issue a loan policy insuring the lender. CPLs provide specific assurances to the lender which safeguard them in the event that dishonesty, fraud, or negligence cause failure of the escrow agent to properly disburse the closing or escrow funds in a real estate transaction. A CPL also provides assurances to the lender that their written closing instructions have been complied with.
CPLs are issued in most states and some of them restrict, limit or even prohibit their use. According to Washington State law (RCW 48.05.330) CPLs may only be issued when a title insurance company or its issuing agent is handling the closing.
Occasionally a lender will request a CPL when the closing is being handled by an outside party (i.e. independent escrow company or attorney) and not the underwriter or its issuing agent. In these cases the CPL can only be issued after a sub-escrow is opened and the underwriter or its agent has been instructed to accept lender loan funds, collect title related fees and premiums, the sub-escrow fee, payoff all liens that appear in the preliminary title commitment (i.e. “title report”) and forward the balance of funds to the outside party. The CPL does not protect against acts of the outside party.
Closing protection letters are largely misunderstood and misused. A CPL is not insurance and its application is limited. However, the lender”s title insurance policy does contain provisions which, among other things, insure the lender that it has an enforceable and valid lien on the subject property. Furthermore, the escrow agent must also have errors and omission insurance which provides protection against fraudulent or dishonest acts as well as unintentional errors and omissions.
Q: Is there an organization working on standardizing and streamlining the property records & transaction process in the United States so that we can have more efficient and greener real estate transactions in the future?
A: Why yes! In fact PRIA (Property Records Industry Association) is devoted to working on such things!
And we have had the privilege of having a brief phone interview with one of PRIA’s advisory council members, Mark Monacelli. In 2007 Mark was recognized with the PRIA Carl R. Ernst Award for Unique Industry Leadership. In the interview below, Mark explains what they do and how they are working to create higher and greener standards in the Real Estate industry.
PRIA is a non profit that develops standards and best practices on specific subjects within the Real Estate Industry. They create standards for a wide range of things including document formatting, eRecording standards, and a uniform set of standards from loan origination to closing for all states in the US.
If you have ideas, questions, or feedback on how you think the Real Estate Records process could be more efficient, please chime in by commenting below.
Real estate loans (usually in the form of deeds of trusts) can be foreclosed through court proceedings (a judicial foreclosure) or outside of the court’s involvement (a non-judicial foreclosure) in the State of Washington. If a deed of trust contains a clause which provides “power of sale” to the trustee (a designated party listed on the deed of trust) and a statement which confirms that the property is not being used principally for agricultural purposes it may be foreclosed non-judicially. Otherwise it must be foreclosed judicially.
Here’s what happens in a non-judicial foreclosure:
- Loan payments are not made and a default occurs.
- Once a default has occurred the lender (or the trustee) sends a written notice of default to the borrower by first class mail and either registered or certified mail. The lender must also post a copy of the notice in a conspicuous place on the premises or personally serve a copy to the borrower.
- If the borrower does not pay the outstanding amounts (i.e. cure the default) within 30 days of the issuance of the notice of default the lender may authorize the trustee to issue a notice of sale. The sale may not take place less than 120 days from the issuance of the notice of default.
- If the borrower does not cure the default the trustee sends a written notice of sale to the borrower by first class mail and either registered or certified mail. The notice is also sent to parties with recorded/filed monetary encumbrances (i.e. deeds of trust, mechanics liens, judgments, etc…) and the plaintiff(s) in any filed court action and any party who has recorded a request for notice as specified by law. The trustee must also post a copy of the notice in a conspicuous place on the premises or personally serve a copy to any occupant. The notice is also recorded with the county auditor and must be recorded at least 90 days prior to the sale date.
- The sale (i.e. trustee sale) may be halted up to 11 days before the sale date if the default is cured or the loan is fully paid. After that time the lender does not have to agree to accept payment.
- If the sale is not postponed (by the borrower filing bankruptcy) the trustee will “cry” (i.e. conduct) the foreclosure sale in the public place at the time and location specified in the notice of sale. The sale is usually held on the front steps of the county courthouse but it could be held in any location. The sale must be held on a Friday between the hours of 9 a.m. and 4 p.m. If the Friday is a legal holiday the sale will take place on the following Monday.
- Once the sale takes place the deed of trust is foreclosed. A Trustee’s Deed is recorded soon afterwards and the successful bidder becomes the owner.
Click the image to download a guide to customary closing costs.
Purchasing a home generally revolves around two things: emotion and money. In this post we’d like to address the money portion, in particular we’ll touch on closing costs. Customary closing costs are a huge part of buying a home and during the purchase of a home you’ll find escrow plays a huge part in calculating these closing costs.
Definition of Closing Costs: Fees and expenses, over and above the price of the property, incurred by the buyer and/or the seller in the property ownership transfer. Examples are title searches, closing services, loan fees and deed filing fees. Also called settlement costs.
Per the definition you can see there are two sides (buyer and seller) to the equation when determining closing costs. Below is a simple customary closing cost list. Keep in mind these are typical, but should not be considered hard fast rules, feel free to consult your real estate agent for more detail.
Typical Closing Costs for a BUYER:
- One-half of the escrow fee (according to contract)
- Lender’s title policy premiums
- Document preparation (if applicable)
- Tax pro-ration (from date of acquisition)
- Recording charges for all documents in buyer’s names
- Home Owner’s insurance premium for first year
- Home Warranty (according to contract)Preview
- Inspection fees (according to contract): roofing, property, geological, pest, etc.
- All new loan charges (except those required by lender for seller to pay)
- Interim interest on new loan from date of funding to first payment date
Typical Closing Costs for a SELLER:
- One-half of the escrow fee (according to contract)
- Work orders (according to contract)
- Owner’s title insurance premiums
- Real estate commission
- Any judgments, tax liens, etc. against the seller
- Any unpaid Homeowner Association dues
- Home Warranty (according to contract)
- Any bonds or assessments (according to contract)
- Any loan fees required by buyer’s lender (according to contract)
- Recording charges to clear all documents of record against seller
- Payoff of all loans in seller’s name (or existing loan balance being assumed by buyer)
- Interest accrued to lender being paid off, reconveyance fees and any prepayment penalties
- Excise Tax (% based on county and sale price)
Buying or selling your home can be one of the biggest financial decisions of your life. But knowing what to expect by being informed can make the process easier for you!
Two are better than one… (even when it comes to ordering title and escrow online)
We offer two ways to order title and escrow online.
Ordering title and escrow online is not a new thing for real estate professionals in Seattle, Tacoma, and the surrounding communities. But for us at Ticor, allowing our clients to place a title and escrow order online without logging in to myticor.com is a new thing.
In the past, we have required our clients to create an account on our site that stores basic information like what real estate brokerage they are affiliated with, their phone number, email address, and who their representative is at Ticor, etc. In reality, this is the most efficient way for users to use our website. When logged in, placing a title and escrow order is quicker because the order forms will already be populated with the Real Estate agent’s or Loan Officer’s contact information. This saves a bunch of time keying in basic info when it’s time to order title and escrow.
But, we realize that not everyone wants to register on our website and remember a username and password. So we have created a title and escrow order form that is available for users that are not logged in to Ticor’s website. There are a few required fields that are necessary for us to identify who is placing the order of course. But the rest of the form has the same familiar fields that our loyal clients are accustomed to.
Thanks for the orders!
Marketing / Technology Integration
We’re very happy to announce that we have recently fulfilled the requirements for becoming certified green in our Title & Escrow Plant in Renton and in our Escrow branches around the Puget Sound! Quite simply, that means we are using technology to save paper, recycling more, and implementing more business practices that Reuse, Reduce, and Recycle!
Ticor has certified Green branches in the following locations:
The Ticor Dashboard is a prime example of one of the technologies that we use to reduce waste and facilitate a more efficient communication flow with all parties involved in escrow transactions. For a brief demo of our dashboard, click here.
Upon hearing of our newly minted status as Greener Title & Escrow people, one of our clients responded so positively, we decided to do an impromptu video to capture some of his enthusiasm about a more sustainable approach to handling real estate transactions!