05 Oct Five Items to Consider Before Hiring an Escrow Company
Five Items to Consider Before Hiring an Escrow Company
While it’s exciting when a client finds a home that they’re ready to sell or purchase, there is still ample work to be done before move-in day, and the real estate professional’s job is to protect the client’s interests until the sale is closed. In fact, one of the duties you will inevitably have to address prior to closing is choosing an escrow company. Opening escrow with the right escrow company plays such a tremendous role in the closing process that finding the right escrow agency can not be overlooked.
As you help your client to choose a secure and reliable escrow company, there are a number factors to keep in mind. Here are the five that we feel are most critical to finding the right escrow provider.
Years of Operation – Longevity is a good indicator of a company’s strength and reliability. One of the first questions you should ask is how long has the escrow company been in business. If the company has only been in business for a few years, this should not necessarily exclude them, but you should take a very close look at other factors before deciding to use the company.
Company Management Experience – While the longevity and reputation of the company is important, it’s also a good idea to consider the experience of the company’s management and the agent that you will be dealing with. A company is only as good as its employees, and your clients are going to be exposed to the local escrow agent. Here are a few items to look at as you evaluate the company’s strengths and weaknesses:
- Is the agent experienced in the business?
- Do they have a reputation for professionalism?
- Are they friendly and efficient?
- How is their relationship with the lender that you are using?
Also, don’t forget to ask about their previous experience and if they are less than forthcoming, take it as a sign to look elsewhere.
Consult Friends, Neighbors or Online Review Sites – Most of us have friends, family or neighbors who have bought or sold a home in the recent past. If your clients can provide feedback on escrow companies from such transactions, good or bad, take these real life experiences into account.
As a real estate professional, you have probably already begun forming your own opinions on various companies. Likewise, you may already have a network of other professionals whom you can consult. However, friends and business contacts are not the only source of information, when it comes to escrow companies. In fact, online review sites make it easier than ever to compare and contrast the strengths and weaknesses of local escrow companies. Yelp would be a great example, as there are over 20 escrow companies listed in the Beverly Hills area alone–many of them already have multiple reviews.
Office Location – Location is not only important with regards to your client’s new home but also to the choice of the escrow agent. As your client will have to visit the agent’s office at least once during the closing process for such processes as signing papers, delivering checks, and verifying identity, an office located at a convenient distance for your client is important. If your client has to drive an hour for these “errands”, they will be inconvenienced and could therefore become dissatisfied with the experience. Indeed, this is why New Era Escrow chose its office locations.
Our offices are located in Manhattan Beach and Beverly Hills, but with today’s technology the location of an escrow company is not nearly as important as the customer service we provide. I can promise you that we will accommodate your clients’ needs and close the deal fast, no matter where the home is that you are selling and where the buyers/sellers are located. We use RedX for real-time updates and at-a-glance transaction overviews, in addition to working with DocuSign as much as possible.
Escrow Company Fees – Many people mistakenly believe that escrow fees are all the same. In fact, they can vary a great deal, and it’s important that you select one whose fees are reasonable. The fees may not be the lowest as this shouldn’t be your only criteria, but they probably shouldn’t be the highest either as you keep in mind your client’s best interests.
Whether the buyer or seller pays certain fees may vary depending upon the state where you are located. These will be clearly communicated ahead of time and outlined in the closing documents. While recording fees and transfer tax fees for example are non-negotiable and won’t vary, other escrow fees will vary from company to company, and you need to clarify these for your client.
Also keep in mind that pursuant to the 2015 TILA-RESPA Integrated Disclosures Regulation (TRID), title and escrow companies must adhere to stricter guidelines concerning fees. As a result, you will need to obtain accurate title insurance premium costs and closing fee estimates from your title company, upfront. This should eliminate or substantially reduce instances of escrow companies charging junk fees. However, when choosing an escrow company make sure that they are able to comply with these new changes.
Most people who buy and sell a home don’t think much about the escrow company that is used, and this is how it should be. The escrow company that you help your client select for the closing process should be so good at what they do that any speed bumps in the process are dealt with completely in the background, with the clients being shielded from any unpleasantries or inconveniences.
Case in point, to ensure that our clients receive as seamless a transaction, as possible, New Era Escrow’s services include automated email alerts called RedX notifications, which notify all parties as to the status of the escrow, as the transaction progresses from one phase to the next.
Good escrow companies can communicate effectively with all parties involved, making the process as seamless as possible. By following the selection criteria provided, you’ll be able to help your client select a secure and reliable escrow company as they move towards their closing.