Sep 15, 2020

Everything You Need To Know About ESCROW

For sellers,  For buyers

Welcome to the topic “Everything You Need To Know About ESCROW.”

When you do a sale or purchase, you might wonder if you can trust the person with whom you are making the deal. If you understand the concept of escrow, you can move comfortably and minimize any risk. Whether earning an online sale or dealing with a Colorado real estate transaction, it is essential that you learn what escrow means and how it works.

What is Escrow?

It can be defined as a neutral third party that holds a valuable asset (usually cash) in a significant financial transaction between two parties until the transaction gets completed. When we hear something referred to as being in escrow, this means that currently the asset is being held by the third party. While escrow is generally linked to real estate, it can be extended to other significant financial transactions also.

It is typically used so that a neutral party gets involved in a transaction, thus giving buyer and the seller more comfort in a deal, knowing that an independent mediator can mitigate the possibility of any party trying to rip off the other party. An unbiased mediator can be an escrow service that can help to resolve any complications that arise in large scale transaction. Your best realtor team will oversee the entire escrow process, so you don’t need to be too concerned if you don’t understand all the details.

Real estate

Usually, the mortgage lenders insist on a real estate escrow account for the buyer before the purchase, home inspection or any disclosures on the condition of the home are completed. In the State of Colorado, escrow is often required for the home purchase to occur in the Colorado investment properties.

With Colorado licenses realtors, both the property and money will be considered in escrow before the deal is finalized. Once both the buyer and the lender are aware that the property is in satisfactory condition, then the money from the escrow account is released on the closing date of a home purchase.

Escrow Accounts

The accounts are used before the sale officially goes through, whether it is the real estate or other areas. Once the buyer puts the funds into an account, it is then the responsibility of the seller to hold up his/her end of the bargain. Once the transaction is done, the money that is owed to the seller is released from the escrow account. Specific to real estate, the funds would not entirely be of the cost of the home, but upon completion of the purchase, those funds still go to the seller.

The buyer who moves into the home can use the account, as the mortgage lender pays money that is owed on property taxes and the insurance of the homeowner out of the escrow account that is funded by the buyer. Often minimum balance is required in an escrow account, and for the homeowners and the mortgage lenders, an escrow account can also work as a safety measure to ensure that the payments are made on time with the money that is saved away from these payments.


Online escrow is used by consumers to offer a measure of protection on the digital purchase of any product or service. No matter how much the internet develops and grows, online sales are always an incredibly risky endeavour for most people. Though not every online transaction can be as huge as that of a home purchase, you still need a safeguard in order to get your money back if anything goes wrong with an attempted purchase.

The online escrow model works the same way, as the money is kept by a trusted third party in the same account until the conditions of the purchase are satisfied by both the buying and the selling side, then the escrow money is released.


Most of the home buyers, especially the ones who are buying for the first time, they might not fully understand the issue of escrow and how it is directly related to the home purchase. They should realize that it has a vital and protective role to play in the home buying process and must be understood thoroughly by the homebuyer and also the seller.

Have any questions regarding the topic? Feel Free to comment down below.

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