Washington State Real Estate Transaction
How do you buy a home in Washington State? What does Escrow mean? How does a property change hands? What does closing mean? These are all questions that I explain to my new clients, whether they are buyers or sellers. Every state has their own type of loan processing/closing procedures. If you read any type of real estate news articles you might hear that lawyers process and close transactions in some areas of the county, that title companies process and close some in other areas but here is Washington 99% of the time Escrow Companies do the processing and closing of real estate transaction files.
What is Escrow? Escrow is simply a Disinterested Third Party. I spend 3 years in California processing escrows for First American Title/Escrow. Its a tough job. It is not a job I would ever want to ever do again. Escrow is so important to the transaction and yet most parties don’t give the Escrow team the time needed to preform their job in the manner they should be able to. We as real estate brokers always pressure escrow to do the sometimes impossible. Lenders are sometimes the worst when it comes to the flow of documents to escrow. I have a huge respect for escrow teams in the area and I always try to give them the time the need to process the file for closing.
What does a typical purchase and sale transaction look like in the Puget Sound area? First there needs to be a fully executable purchase and sale agreement. One that is completely filled out and signed by all interested parties. The purchase and sale agreement which in the Northwest Multiple Listing Service area is called Form 21 Residential Purchase and Sale Agreement when completed is then sent to the Escrow Company agreed upon by the seller and buyer.
Escrow can now start to preform the service directed by the contract. The first thing escrow will do is order a copy of the Preliminary Title Report from the Title Company listed on the Purchase and Sale Agreement. Once the title report is received escrow will send copies to all the parties; buyers, sellers, listing agents, selling agents and lenders if the contract has financing addendum.
Escrow will now order any loan payoffs and clear any type of title issues. In a couple of weeks the if there is a lender involved escrow will receive the lender documents with instructions on how to proceed. Closing documents are prepared per the instruction and a closing statement is made available. Once the loan documents are processed the escrow officer will make appointments for signatures by buyers and sellers. Here in the area the parties do not sit around a closing table and sign documents together. Thank goodness!
Now the escrow officer can send the Original Deed and Deed of Trust to the County Recorder for recording. The county records the documents and this marks the transfer of property. This is the actual closing. Closing takes place once the county has handed over recording numbers to escrow.
Usually at this point escrow makes the call that and says “We are Recorded”. Sellers will receive their proceeds and the new buyer will receive their keys.
Its a simple process that works very well if everyone does their job and allows time for everyone else to do theirs.