What Is Escrow Money?
What is escrow money and what role does it play in real estate?
Escrow money is sometimes called good faith or hand money. It’s the money the buyer puts into a special account with a fiduciary as a sign of their intentions to go through the purchase of real estate. In our area, the listing brokerage typically holds the escrow money, but not always. It could be the buyer’s agent, the title company, or some neutral third party at closing. The money is applied to either the buyer’s down payment or the closing cost.
If the buyer walks away from the transaction for a reason that wasn’t allowed as part of the purchase agreement, they lose that money. In today’s super-hot seller’s market, buyers are encouraged to put as much money as they can into the escrow to show how serious they are about completing the purchase. After all, it’s harder to walk away from $5,000 than it is $500.
If you have more questions about escrow or anything else to do with real estate, don’t hesitate to reach out to me. I’d love to help you.