Key Details That Impact the REO Escrow and Closing Process

Buying an REO (or Real Estate Owned) property is a little different escrow process than your standard home sale. REALTORS and buyers need to remember that they are in escrow with a bank/lender (the “seller”) and that the bank/lender has strict procedures in place to follow during the process. Here’s a glimpse into details to look out for if you’re in an REO transaction and Glen Oaks Escrow is your escrow provider:

1. Escrow isn’t officially open until the seller has uploaded the contract into the seller’s online systems, it’s been signed by both the buyer and seller, and it shows as a “task” in the seller’s online system to open escrow.
2. Escrow instructions, preliminary title and commission orders will be e-mailed 48 hours from the receipt of the seller’s fully executed contract.
3. Loan documents must be received 24 hours before the buyer’s appointment to sign.
4. Expect to wait up to 5 days from the buyer’s signing date for escrow to receive the estimated HUD approval from the seller.
5. Once approval is obtained, the file is set to record the following business day after the lender’s funds have been received.
6. Funds are usually distributed 24-72 hours after recording.  This timing is subject to seller’s approval of the final HUD statement.

Also important to keep in mind is that communication with Glen Oaks Escrow regarding your transaction is generally most efficient via email.  Email communication provides a written record and time stamp of the communication and allows your escrow officer to respond in a timely manner.

Understanding these details can help to set the proper expectations with buyers and help ensure that your next REO escrow goes as smooth as possible.

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Simply Put – What is an REO and What Does That Mean For Escrow?

The term REO stands for Real Estate Owned properties.  These are properties that are owned by a bank or lender and are for sale to the public. These properties were reverted back to the bank after the homeowner was foreclosed upon.  If the home fails to sell at auction, the bank will put up the property up for sale through a Realtor much in the same way a homeowner lists their property for sale with a REALTOR when selling their home.  The key difference with REO listings is that the bank (or lender) is the seller verses the homeowner as the seller in a traditional listing.

REO properties are a hot commodity right now as roughly half of the foreclosures going to auction are reverting to REOs. More and more people are seeing that they can get a great price on an REO property and still enjoy a buying process that is very similar to buying a home in the traditional fashion.  However, because the property is owned by the bank or lender, in an REO purchase transaction, there are a few differences in the escrow process from a traditional home purchase transaction.

REO listings offer viewings and inspections just like traditional home buying; the big difference is really in the often rock bottom price and the closing procedures. This is because banks are not in the business of owning Real Estate; their interest is to resell the property as quickly as possible to avoid further risk exposure.  As a result, REOs come with a very strict and tight escrow timeline. Most REOs have a 30 day closing, in some states it can be 45 days, and either way banks are not willing to be flexible.

There are a lot of REO properties available right now so if you’re ready to buy and looking for a deal, now is a great time to consider an REO purchase. Your REALTOR can advise you on the opportunities and your Glen Oaks Escrow officer can walk you through a detailed explanation of the REO escrow process.

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The Closing Statement Exposed! Line Item Escrow Fees Explained

Closing fees are a prickly part of any real estate deal. This is where everybody involved in the sale and transfer – lenders, lawyers, government agencies, and the escrow company – add their numbers to the bottom line. Perhaps the worst thing about closing fees is that they often seem to come as a surprise. This can lead to anger and frustration for the buyer and seller, and inconvenience and headache for agents.

Escrow fees are part of a deal’s closing costs. Let’s explore the typical fees that can show up on a buyer’s closing statement, and help to avoid future cases of sticker shock.

Buyer’s Escrow Costs

Escrow Fees

This is the fee for the escrow service itself, usually a certain amount per $1000 of the sale price. With the escrow fee you are paying to make sure:

• The escrow agent is properly licensed in your state
• They have the knowledge, training and expertise to handle supplemental and unusual escrow situations
• Your escrow process follows all applicable laws, and the sale will be legal and valid
• The escrow agent is an independent third party, competent and trustworthy to caretake and disburse your money.

Loan Tie-in Fee

This fee provides for the escrow company’s time and supplies to print out lender documentation, comply with various lender requirements, and fill out and submit the forms and applications requested by lenders to facilitate the transaction.

E-Document Fee

More and more documents are being sent to escrow companies over the Internet, however they still need to be printed out in order to be archiveable and useful. This fee helps to defray document printing costs.

Processing Fee

Very few escrow situations come without any supplemental or unusual needs. Spouses, ex-spouses, grantees, trustees, business partners, extra government agencies or authorities, all may need to be dealt with in order to facilitate the escrow. All of these contacts take time and documentation. Most escrow companies include one or two added contacts in their escrow fee; a significant number of added contacts will result in a processing fee.

Archive Fee

Legal escrow documents need to be stored by the escrow company for a minimum of five years. This fee helps with the storage and retrieval of the large volume of paperwork involved.

Seller’s Escrow Costs

The seller’s closing statement contains escrow costs as well. The seller will have the same Escrow fee as the buyer, the same Processing and E-Document fees, and an Archive fee.

Closing costs from the escrow company are not a mystery, and don’t need to be a surprise, either. With a little bit of preparation and a phone call or two, both buyers and sellers can know in advance what their closing costs will be, and clear a potential obstruction on the way to a completed sale.

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Defining Escrow | Escrow for California Real Estate Explained

According to Merriam-Webster, escrow is defined as: a deed, a bond, money, or a piece of property held in trust by a third party to be turned over to the grantee only upon fulfillment of a condition.

Whether it is the buying and selling of a home, or the transfer of a business, the amount of legal documentation and financial liabilities can easily create confusion or differences of opinion amongst the buyer, seller and/or their representatives. This is why an impartial, third-party representative becomes essential to focusing on the facts and responsibilities that must be fulfilled.

With so many parties obligated to fulfill so many responsibilities in any given real estate transaction, it quickly becomes apparent why a neutral third party (escrow) is essential to a smooth process.

Escrow is the one who facilitates (just to name a few):

• drawing of escrow instructions which reflect the negotiated points of the contract and act as basis for execution of the property transfer.
• confirmation of clear title from the Title Company
• the recording the deed with the County Office
• filing paperwork with the proper municipalities
• the receiving of wires and funds to be disbursed

In addition to the above responsibilities, Glen Oaks Escrow views our most valuable function as acting as a personal liaison and resource for Realtors, buyers and sellers as they tread through the complicated and often technical world of buying and selling real estate.

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