My perfect escrow

As you know by now, I'm on a mission to bust the myth that real estate agents and their preferred service providers are sitting around in back rooms rubbing their hands together and cackling with sinister glee as they formulate evil plots to boost their own profits at their buyer clients' expense.

In reality, what most agents want is for their buyers to get what the buyer wants -- a home that is a good value, in good shape (or in the shape the buyer believes it's in), with a smooth buying process and on-time closing.

When it comes to escrow companies, these service providers have a huge degree of influence on the buyer's experience and the outcome of a transaction. The escrow holder's role is that of neutral, third-party intermediary. Escrow holders are the depository (meaning they collect everyone's funds, deeds and signatures) and the bursar (meaning they distribute all of these items, too), but they do not make any exchanges until all of the parties to the transaction -- buyer, seller and lenders -- give the green light to close the deal. (And in some states, the escrow companies also provide the new owner and lender with title insurance policies.)

Now, the general rule with escrow company selection is that the party who pays for the transaction's escrow services gets to select the escrow provider. In my area, the local standard is for the buyer to pay for escrow, so my clients usually look to me to recommend a good escrow company and officer -- and I know some great ones.

In this article, when I refer to "my" escrow company, this doesn't signify any financial or other formal business relationship between myself and the company -- I get no referral fee from any service providers, although it is legal to do so as long as it is properly disclosed.

I'm simply referring to my preferred escrow service providers -- companies I like to work with because, well, they're good at what they do, which makes my job easier and my client's transaction less stressful and more likely to close on time.

As bank-owned properties have come on the scene, though, the bank/seller wants to select the escrow provider 100 percent of the time. In exchange, the bank is often willing to cover some fees that the buyer would normally pay, like the cost of the owner's title insurance policy. (Note: A number of states are considering legislation that would prevent banks from imposing their choice of escrow company. Hallelujah.)

Since bank-owned homes are such a big part of the inventory on today's market, and since I've represented lots of buyers of bank-owned properties (REOs), I've had many, many occasions now to contemplate and come up with the following list:

Legitimate Reasons Buyers Should Work with My Preferred Escrow Company

• They understand local tax requirements and closing calendars. If your town or state government has transfer taxes, your escrow company needs to know that. Working with an out-of-town escrow holder can result in ongoing uncertainty and surprises about how much cash you need to close. Also, local escrow holders are familiar with the local standard pace of a transaction, and know how to time their requests for homeowners association disclosures, lien payoffs and insurance documentation to avoid delays. ...CONTINUED

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