The purpose of the escrow agreement is to record the earnest money as a deposit made by the serious buyer. Usually the serious buyer will have $500 to $2000 in earnest money. The check for this money should be made out as the seller as the payee, but will be held by a third party. You can use your real estate attorney or the buyer’s agent, if there is one. In California, the state demands an Escrow Agent perform the duties of the closing attorney. Being a neutral third party the Escrow Agent handles all earnest money deposits. In California, there is no need for the Escrow agreement. Some states demand the use of Escrow Agents or Title Company officers to handle closings. Check with your state as to the stipulations required by the state regarding the sale of a home.
The third party holding the check will turn the check over to the seller or returns it to the buyer based on the terms of the Escrow Agreement. The real estate agents is usually the neutral third party with the responsibility of providing the Escrow Agreement, filling it out with themselves as the third party. This is one of the duties you pay for when you pay the commission to the real estate agent.
The Escrow Agreement is a useful document to have when you are selling your "for sale by owner" home without a real estate agent involved. You can purchase Escrow Agreement along with the additional necessary document to complete your sale at any major office supply store, such as Office Max.
A home warranty is a form of insurance intended to cover the major appliances included in the sale of the home and the systems of the home such as electrical, plumbing, and heating and cooling. A home warranty is recommended if you are selling a less than brand new home. The builders of new homes always offer home warranties with their homes.
The Seller’s Warranty is purchased and paid for by the seller. The average cost is $300 to $400. The coverage is for the time period the house is for sale. When the seller purchases a warranty on his home, it is typical for him to include the cost in the sales price. Also the seller should use this when advertising their "for sale by owner" home.
The Buyer’s Warranty is purchased and paid for by the buyer. The average cost is $300 to $400. This short term insurance policy covers the same items as the seller’s warranty, but it does not take effect until the day of closing and will continue for a year. This warranty can be renewed every year as the buyer requires.
