WFG News

Understanding the Escrow Process

By November 16, 2016 No Comments

At the heart of the real estate sales process is a contract for sale. In its simplest form, one party agrees to buy a real estate parcel from another party, hands over a check and collects a deed. It’s never simple. Over the years, the process has become so complex that consumers fear it and the next generation of potential homebuyers have shunned it completely, at least for now.

Today, real estate buyers and sellers, and the mortgage lenders that finance these transactions, rely on escrow services, generally provided by a title company or attorney, as neutral third-parties to shepherd the transaction during the closing process. These escrow officers typically handle all of the paperwork related to the home purchase, mortgage refinance or other title transfer.

Our escrow officers are there to safeguard documents and funds that cannot otherwise change hands until the transaction is completed. We follow instructions to guide the process through to a smooth closing and then ensure that all paperwork is properly filed in a timely fashion. The Escrow officer serves as a safe place to anchor the process, its documents and funds moving toward the transaction’s parties.

Doing the job right

While the escrow process done right will provide that anchor point, it is not correct to suggest that the escrow officer holds the process in place. Quite the contrary, our job is to keep the transaction flowing. We’re like traffic coordinators who keep everything moving toward the closing table, making sure everything is in place to ensure a smooth closing while following the specific instructions that have been set up to guide the transaction.

The real key to making that happen involves taking communication to a very high level. Our systems are designed to ensure that information flows freely between all of the parties, making it easy for anyone to get answers quickly. We use e-mail, but we have also built verbal checkpoints into our process that involve our staff getting on the phone with the parties.

This is important because while much of the work the escrow agent handles is mired in paper and process, the participants to the transaction are people. By focusing on the human side of the transaction, we’re able to aid our lender clients and real estate agents in guiding consumers through the emotional highs and lows that are often part of the home buying and selling process.

The biggest part of that is anticipating the questions and concerns that the parties are likely to have during the process. We employ some of the most experienced escrow agents in the industry. Kimberly Allen, one of our senior agents, has personally participated in over 20,000 transactions during her career. Our people have already encountered the problems that can occur and they know how to anticipate the questions our customer and their borrowers will have.

Making the process flow even better

While the escrow officer can serve as the communication hub for the transaction, everything will go more smoothly if everyone involved makes the same commitment to continuous communication. If even one party involved in the transaction has trouble in this area, the entire deal will suffer, the borrower’s experience will degrade and the risks of losing the deal or having a dissatisfied consumer increase.

This is especially important when it comes to information flowing back to the escrow agent. Some of the information we need to keep the process flowing may not seem necessary or be immediately obvious to other parties in the deal. For instance, if someone important to the process lives in another area or is planning on being away for a period of time, it could impact the closing. The same could be true where someone speaks English, but as a second language; if someone becomes ill or their contact information changes. All of this information must find its way to the escrow officer if we hope to keep the transaction on track.

We see this occasionally with new real estate agents. They are typically moving very quickly as they learn the ropes and often don’t even know what they don’t know. It’s not surprising for them to forget to give the escrow agent full contact information for all the parties. We anticipate that, of course, then dig in to gather the data we need. We have multiple technology platforms that help us stay on track. Some will alert us if information we require is missing. We grab the phone.

Helping consumers understand the business

Like many parts of the real estate sales and financing processes, escrow can be confusing for consumers who are not engaged in this business. We have found that consumers often assume that the escrow officer has more information than we do and has the power to alter the terms of the deal, which we do not.

Some consumers are confused when we ask for the contact information, because they have already supplied it to their loan officer. Being asked again for the same information has been flagged as a cause of customer dissatisfaction with the mortgage process and so it makes sense for originators to help their borrowers understand.

We do our part to help consumers understand that we’re not a giant repository of their personal information, but rather helpful shepherds working to move their deal to the closing table efficiently.

A human approach to an exacting business

At WFG, we’re successful at that because we train our staff never to forget that they are working with real people who are usually going through a period of massive change. Often, the reasons for the change are happy ones, but sometimes we work with consumers who are selling their family homes due to death, divorce, job loss or are simply downsizing at the end of life. These are enormous transitions in a human being’s life and must be treated with respect. We do our best at WFG to add some grace and a lot of care into those transitions.

In the final analysis, the escrow process is about paper and process. We serve as a trusted resource that the transaction participants share. We anchor the process and shepherd the many pieces of what will become the final deal to the closing table. But that’s only the technical part of what we do. It’s traffic management. But the other dimension is the human one.

Our people will tell you that the escrow process is beautiful, magical, amazing. We provide a psychological component that is vital for a process that can take a month or more to complete. WFG puts a lot of attention and extends a great deal of care into these transactions because we know we’re helping people make one of the most significant transitions of their lives.