Sellers Escrow

Sellers Escrow

Open Escrow Account
Once the buyer and seller have a contract, escrow is opened. In San Francisco, escrow and title insurance are handle by one company. It is important to understand these two essential roles:

  1. Escrow: The function of escrow is to act as an independent third party between the seller, the seller's agent, the buyer, the buyer's agent, the lender, and other involved parties. Escrow collects, holds, and releases monies. Escrow only acts when it has matching instructions from both sides.
  2. Title Insurance: Once escrow is opened, the escrow/title company will issue a Preliminary Title Report which contains all publicly recorded information regarding the physical description of the property, the current owner and type of ownership, and any encumbrances, encroachments, or easements of record. Before the close of escrow the title company clears financial liens of the seller. The escrow/title company will issue a title policy which insures clear title. Lenders require an additional "supplemental" title insurance policy.

Buyer's Due Diligence: Contingencies

  1. Financing: If the buyer had a financing contingency, the buyer must secure a loan at the specified rate and term.
  2. Structural Pest Control Inspection:The purpose of this contingency is to gain more information about the physical condition of the property. With a pest inspection contingency, the buyer pays for an inspection. Based on the report, the buyer can negotiate with the seller for a credit or to have the work completed. The seller, however, is not obligated to negotiate.
  3. Inspection by Contractors, Engineers and Architects: The purpose of this contingency is to gain more information about the physical condition of the property. Under this contingency, the buyer can have anyone inspect the property. Based on the reports, the buyer can negotiate with the seller for a credit or to have the work completed.The seller, however, is not obligated to negotiate.
  4. Appraisal: The purchase can be contingent on the property appraising (by an independent appraiser) at no less than the purchase price.

The buyer must remove each contingency in compliance with the purchase contract. The buyer can remove a contingency "subject to" certain new terms being met, but that becomes a new negotiating point to which the seller must agree. If the seller does not agree, the contract and escrow are in jeopardy. Once all contingencies have been removed, the buyer will increase to purchase deposit, usually to 3% of the purchase price.

Close of Escrow

Several days prior to the close of escrow, or earlier, the buyers go to the title company for a working session and finalize instructions and to sign documents. Loan papers can be voluminous and must be notarized. The buyer reviews the closing statement and makes arrangements to transfer funds for the purchase. Once the buyers' and sellers' instructions are completed and all of the funds have been received, the title company representative goes to city hall and records the deed. Neither buyer nor seller need to be physically present.

Once the documents have been recorded, the escrow/title company makes monetary disbursements as per the escrow instructions and then calls the real estate agents to inform them that the transaction has been completed. The buyer's agent calls the buyers and congratulates them and arranges key exchanges. You now own Real Estate!

Contact Information

Photo of Ken J. Gendemann Real Estate
Ken J. Gendemann
Pacific Union International
1699 Van Ness Avenue
San Francisco CA 94109
Cell: (415) 828-4063

Ken J. Gendemann, CPA
Pacific Union & Christie's International Real Estate
1699 Van Ness Avenue, San Francisco, CA 94109

Cell: 415-828-4063, Office: 415-345-3083
 License #: 01884446