Escrow Agent Definition
An escrow agent can be defined as an individual or a company that is probably better termed as trusted third-party that holds a document or an asset for the first party in order to deliver it to beneficiary or second party, within a stipulated time period or as soon as the event mentioned in the escrow agreement takes place.
It works as a third party that acts neutral when it comes to an escrow agreement. These agents act neutral to trusted third party transactions that involve parties that are totally unwary of each other. An escrow agent in transactions pertaining to real estate is one who is concerned with buying or selling a real estate property.
An escrow agent acts as a neutral middleman that is charged with the responsibility of maintaining the escrow account. It is also responsible for overseeing the overall escrow process for the purpose of ensuring that all the conditions of the sales are duly met. Duties include:
- Preparation of escrow instructions
- Acting as a neutral intermediary between the parties involved in a transaction
- Proration of taxes, insurance, interest, and rents
- Procurement of purchase funds from the customers
- Receiving the loan funds from the customers’ lender
- Recording of the deed along with such other related documents
- Disbursement of the funds
- Preparation of the final statements for the parties that are involved in a particular transaction
- Ensuring 100 percent compliance with the seller’s requirements
- Preparation of the deed and such other documents that are related to escrow agreements.
How to Become an Escrow Agent?
One can choose to become an escrow agent but it is always advisable to know that it is really a responsible job and it would require aspirants to sit right in front of their desktops for the longest hours. The job of an agent does not require fieldwork but meeting deadlines and preparing for closing could be actually very stressful. Therefore, an aspirant must always self evaluate oneself and confirm if he is ready to accept and face the challenges underlying in this profession and fits all the criteria required for acquiring the job.
An aspirant must fulfill the following career requirements –
- Degree Level – The degree level varies, but still, an undergraduate degree is highly preferred.
- Degree Field– The aspirant must have a degree in finance, business administration or any other field that is directly related to the profession of an escrow agent.
- Experience -The experience may vary, but still, a minimum of one to two years of experience is highly preferred.
- License and Certification– It is mandatory to have a state license. However, an optional professional certification is also preferred.
- Key Skills – They must have strong oral and written communication skills, organizational skills, consumer-service skills, client handling skills, and skills pertaining to the analysis of written documents.
Steps to Become Escrow Agent
The following are the steps –
- Step 1- An aspirant must have the necessary and relevant education as discussed above
- Step 2- An aspirant who qualifies the first step must necessarily procure a beginner level job
- Step 3- After qualifying the first two steps, it becomes mandatory for an aspirant to obtain licensure with respect to escrow
- Step 4- In the fourth step, an aspirant would require and secure the job of an escrow agent
- Step 5- In the last step, an aspirant will need to advance his career with proper certification.
What does an Escrow Agent Do?
They serve as a neutral intermediary between the parties involved in a transaction. He is responsible for requesting a preliminary title search for determining the title status of an asset, ensuring full compliance with the requirements of the lender, preparation of the deed and such other documents that are related to the escrow agreement, proration of the taxes, interest, rents, and insurance, and so on.
An escrow agent in transactions with respect to real estate dealings is all about purchasing and selling real estate. In transactions like real estate would be required to secure the property as well as examine the related documents in order to confirm whether the terms of the sale transaction are duly met by both of the parties or not. If an escrow agent is a title company in a real estate transaction, then in such a case, the company will need to hold the escrow agreement until and unless all the terms of the same are met by the parties to that particular transaction.
Escrow Agent Fees
The fees usually tend to differ from agent to agent and their quality of service and experience in the industry. The negotiation skills of the parties to a transaction too can influence the fees.
Escrow Agent vs Closing Agent
The job of an escrow agent and closing agent might look similar but in reality, these are poles apart from each other. A closing agent actually works for an escrow agent or a title company. A closing agent is responsible for holding your deposits in a separate escrow account, preparation of closing statements and obtaining title insurance. A closing agent merely facilitates the transfer of an asset to the buyer from the seller while the roles and responsibilities of an agent are far way too much.
An escrow company is also known as a title company. An agent can be an individual or an organization and they are supposed to act neutral and unbiased to the related parties of any transaction. The roles and responsibilities are extensive and never-ending. An escrow agent in real estate dealings is concerned about the purchase and sale of a real estate property. He or she would need to secure the real estate property and examine all the documents for the purpose of confirming if the terms of the sale transactions are adequately met by the parties to those transactions or not.
This has been a guide to Escrow Agent and its definition. Here we discuss how to become an escrow agent along with its steps, roles and its differences from closing agent. You can learn more about accounting from the following articles –