An Escrow company provides a service for the public including a means of protecting both documents and money or funds. They are a neutral third party that buyers, sellers, mortgage companies and investors use to hold and transfer funds and documents as needed, especially in a real estate sale/purchase or other transfer.
Most parties involved in a transaction want a neutral third party, an Escrow company, to provide the assurance that no monies or funds or property will change hands until all instructions are carried out and have been followed. Consider the alternative. Would a buyer ever want a seller to hold his earnest deposit of up to thousands of dollars, hoping that it will be applied as agreed upon. No, we want someone not partial to the transaction to hold the earnest deposit, and the mortgage company wants to wire the money to the Escrow Company to distribute to the seller and the buyers as agreed.
Who chooses the escrow company? In a real estate transaction, in Arizona, especially Phoenix, Chandler, Ahwatukee, and Gilbert, the escrow company is usually a joint agreement between the buyer and seller. Historically, the buyer has chosen the escrow company because its his earnest deposit that is initially being held by a third party. In many cases, however, especially when an investor has a long relationship with an Escrow company or officer, he/she may request a particular company. In my real estate business, located in Phoenix but representing the entire Valley of the Sun, I recommend to my buyers that they choose the Escrow and title company.
Where do you find a reputable escrow company? Most real estate agents know several local Escrow companies especially in Phoenix or Chandler. Lenders also are familiar with Escrow Companies and can recommend several to you. You can also find them on the internet, and yellow pages under Real Estate Escrow, Escrow or Real Estate title Insurance, since in Arizona most Escrow Companies are also Title Companies.
Reviewing, you almost always should have an Escrow company to accept and disburse all monies involved in the transaction, and gather, and issue all documentation as their needs are met. There is simply too much at risk not to use a neutral third party for your real estate transactions. The cost of an escrow company is minimal from a few dollars to a few hundred dollars and the protections is priceless! Escrow companies can be found in the phone book or ask any real estate agent.
