Escrow is a crucial process that helps you transact any amount of money with a stranger. With escrow, you cannot lose your money if anything goes wrong with the contract. As a homebuyer, you can trust escrow processes to help you make the right choices during the home-buying process.
However, if you take a mortgage, the bank will hold the money on your behalf. In addition, the bank also sends a property valuer to the home you want to buy. This idea ensures you don't fall prey to an expensive-for-nothing house. In this case, the bank acts as the escrow since it releases payment to the seller if you are comfortable with the property.
This post explains more about the escrow process and how it can help you close real estate deals.
What is Escrow?
An escrow is a deposit of money or property by one party (the buyer) to another (the seller), with a third party (the escrow agent) holding the deposit until certain conditions are met. The escrow agent may be a title company, attorney, escrow company, or real estate broker.
The escrow process in Kenya is a process whereby a third party holds onto funds on behalf of the buyer and seller in a real estate transaction. This third party is typically a licensed escrow agent, title company, or attorney. The funds are held in an escrow account until all the conditions of the sale are met, at which point they are disbursed to the appropriate parties.
An escrow's purpose is to ensure that both the buyer and the seller perform their obligations under the sales contract. For example, the buyer deposits money in escrow to show that he or she is serious about buying the property. Once the conditions of the sale are met, such as the buyer getting a loan or the seller providing a clear title, the escrow agent will release the money to the seller.
The escrow process in Kenya typically begins when the buyer and seller agree to the terms of the sale and sign a purchase and sale agreement. The buyer then deposits the agreed-upon amount of money into the escrow account. Once all the conditions of the sale are met, the escrow agent will disburse the funds to the seller.
The Escrow Process in Kenya
When you purchase a home in Kenya, the escrow process is handled by a third-party company. This company is responsible for holding onto the deposit and other important documents until the sale is finalized. The escrow process protects both the buyer and the seller by ensuring that all necessary paperwork is completed and that the buyer has the funds to complete the purchase.
The escrow company usually works with the buyer and the seller to coordinate the deal closing date and time. Once the date is set, the buyer must bring the necessary funds to the escrow company. The escrow company will then release the deposit to the seller, and the sale will be finalized.
The escrow process is an important part of buying a home in Kenya. It protects both the buyer and the seller and ensures that all of the necessary paperwork is completed. If you are considering purchasing a home in Kenya, be sure to ask about the escrow process and how it will work.
Advantages of Escrow
Escrow is a process that helps to ensure that all parties involved in a real estate transaction are protected. It also helps to ensure that the transaction is completed promptly and efficiently.
Here are four advantages of using escrow:
-Helps to protect the buyer: In most cases, the buyer will not be able to receive the keys to the property until all of the funds have been paid. This helps to protect the buyer in case the seller tries to back out of the deal or if the property is not as described.
-Helps to protect the seller: The seller will not have to worry about the buyer trying to back out of the deal at the last minute. They will also be protected if the buyer does not have the funds to complete the transaction.
-Avoids delays: Using escrow can help avoid delays that can often occur when buyers and sellers try to coordinate the transaction's timing. This is because all of the funds will be available as soon as the deal is finalized.
-Provides peace of mind: Escrow can provide peace of mind because both buyer and seller are confident with the transaction.
Disadvantages of Escrow
Homebuyers should be aware of a few potential disadvantages of escrow before agreeing on the contract.
-Homebuyers may not be able to shop around for the best possible deal on their own if they are using an escrow service.
-Homebuyers may have to pay fees for the escrow service, which can add to the overall cost of the purchase.
-The escrow process can take some time to complete, which may delay the deal's closing.
-Homebuyers may not be able to change their mind about the purchase once the escrow process has started.
-If the deal falls through, the homebuyer may not be able to get their earnest money back.
The escrow process in Kenya is relatively straightforward. However, there are a few key points that homebuyers should be aware of before they begin the process.
First, it is important to clearly understand the property's value and the amount of money needed to complete the transaction. Buyers should also be aware of the fees associated with the escrow process and be prepared to pay them.
Finally, buyers should be prepared to provide the necessary documentation to the escrow agent to complete the transaction.
Frequently Asked Questions
What is the escrow process in Kenya in simple terms?
The escrow process involves a buyer sending their payment into an escrow account. On the other hand, the seller delivers the property documents to the escrow agent. The buyer can verify all the documents and the property before closing a deal.
How does escrow protect the buyer?
The buyer can get their funds back when the property seems unappealing. However, the escrow can take some percentage, but it saves the buyer big time.
How does escrow protect the seller?
If the buyer doesn't have enough funds, the escrow will notify the seller, and they can withdraw from the document transfer before things escalate. That protects the seller from losing their property to cons.