Escrow is a service provided by a third party to hold funds until the buyer’s broker and seller’s broker have fulfilled each portion of their contract. Escrow companies may be hired by either the buyer’s broker or the seller’s broker, however, the most common arrangement is that the seller’s broker will make the decision to choose an escrow company. When all monies collected during the commission of a real estate sale have been completed, the escrow company will issue the house keys to the new buyer. The escrow company performs like a watch dog over the contract to ensure all contract elements have been completed, all banks have been paid, and protection is given to both buyer and seller until the completion of the transaction. Escrow fees are added to the buyer’s real estate purchase agreement and will be collected by the escrow service company at the start of the escrow involvement with the sale.
