Top 5 Mistakes to Avoid During the Escrow Process
The escrow process can be a complex and sometimes overwhelming part of buying or selling a home. For first-time buyers or sellers, it’s easy to make mistakes that could delay or even jeopardize the transaction. Understanding the most common pitfalls will help ensure a smooth escrow experience. Below, we’ll discuss the top five mistakes to avoid during the escrow process and how Neighborhood Escrow can help you navigate the process with ease.
1. Failing to Review Documents Thoroughly
One of the most critical steps in the escrow process is reviewing and understanding the documents that are part of the transaction. These include purchase agreements, disclosures, inspection reports, and loan documents. Unfortunately, many buyers and sellers rush through this step, potentially missing important details that could affect the transaction.
What to Look Out For in Documents
- Errors in the Contract: Double-check all terms and conditions to ensure accuracy.
- Hidden Fees: Look for any unexpected costs that may not have been disclosed upfront.
- Deadlines: Pay attention to deadlines, such as those for inspections or securing financing, to avoid penalties or delays.
Working with an experienced escrow company like Neighborhood Escrow ensures that all documents are properly reviewed and any discrepancies are addressed promptly.
2. Ignoring Financial Contingencies
Many real estate transactions include financial contingencies, which are conditions that must be met for the sale to proceed. For example, buyers may need to secure financing or sell their current home before they can close on the new property. Failing to pay attention to these contingencies can lead to serious complications.
Common Financial Contingencies
- Loan Approval: Ensure your financing is secured before removing the loan contingency.
- Appraisal Contingency: The property’s appraised value must meet or exceed the purchase price.
- Selling Your Current Home: If you’re a buyer, make sure your current home is sold before moving forward.
At Neighborhood Escrow, we help ensure that all contingencies are managed effectively, giving you peace of mind that nothing will fall through the cracks.
3. Skipping the Home Inspection
A thorough home inspection is crucial to understanding the condition of the property. Some buyers, eager to close quickly, may choose to skip this step, only to discover costly issues later. Skipping a home inspection can lead to unexpected repairs and financial strain.
Why a Home Inspection Matters
- Identify Structural Issues: Discover any major problems with the home’s foundation, roof, or plumbing.
- Negotiate Repairs: A home inspection report can give you leverage to request repairs or a lower purchase price.
- Avoid Future Costs: An inspection helps you avoid surprises that could cost you more after closing.
To protect your investment, Neighborhood Escrow encourages buyers to always include a home inspection contingency in the purchase agreement.
4. Making Major Financial Changes During Escrow
Once you’ve entered the escrow process, your financial situation should remain stable. Making major purchases or changing jobs could impact your mortgage approval. Lenders often conduct final checks on your financial status before closing, so any significant changes could result in delays or even loan denial.
Avoid These Common Financial Pitfalls
- Opening New Credit Accounts: Avoid taking out new loans or credit cards during escrow.
- Large Purchases: Refrain from making major purchases, such as a car or furniture, until after the sale is final.
- Job Changes: If possible, avoid switching jobs while in escrow, as this could affect your loan approval.
Keeping your financial situation stable ensures a smoother escrow process and a successful closing.
5. Missing Deadlines
The escrow process is full of important deadlines, from submitting your earnest money deposit to completing inspections and securing financing. Missing even one deadline can cause significant delays, and in some cases, it can lead to losing your earnest money or the deal falling through.
Key Deadlines to Track
- Deposit Due Date: Ensure your earnest money deposit is submitted on time.
- Inspection Period: Complete all inspections within the allotted time.
- Loan Approval Deadline: Secure your mortgage financing before the contingency period ends.
At Neighborhood Escrow, we help you stay on top of all deadlines, ensuring that nothing is overlooked and that your transaction stays on track.
Trust Neighborhood Escrow to Guide You Through the Escrow Process
Avoiding these common mistakes can make a world of difference in ensuring a smooth and stress-free escrow experience. At Neighborhood Escrow, we provide the expert guidance you need to navigate the escrow process with confidence. From reviewing documents to managing deadlines, we are here to protect your interests every step of the way. Contact us at 310-378-2456 to learn more about how we can help with your next real estate transaction.
