In real estate transactions, escrow is a legal arrangement in which a neutral third party holds the funds and documents related to the sale until the agreed-upon conditions are met. Escrow can provide protection for both the buyer and the seller, but it can also add time and expense to the closing process. There are several ways to avoid escrow when selling a home, including:
- Selling the property to a cash buyer. Cash buyers do not need to obtain financing, so there is no need for an escrow account to hold the loan funds.
- Getting a pre-approval for a mortgage. If the buyer has already been pre-approved for a mortgage, the lender will have already verified the buyer’s financial information and determined how much they can borrow. This can help to speed up the closing process and eliminate the need for an escrow account.
- Using a title company. A title company can handle the closing process and hold the funds and documents in escrow. However, title companies typically charge a fee for their services.
Ultimately, the decision of whether or not to use escrow is a personal one. There are pros and cons to both options, and the best choice for one seller may not be the best choice for another.
