Pat Goss' Tips & Expert Advice

Escrow Explained

Most people think of mortgages when escrow is mentioned, but escrow services can be used for the transfer of ownership of any item. Houses, cars, furniture, and jewelry are a short list of items that escrow services might be utilized for. Escrow is an account which is not owned by the buyer or the seller, and it is used to protect both of the people involved in the transaction. In the instance of buying or selling a car, escrow works like this: instead of handing a check over to the seller before the title is completely transferred, the buyer instead places the purchase money into an escrow account. The escrow account is a safe place for the money to sit while all the paperwork is accomplished. After the title is transferred and everyone is satisfied with the transaction, the escrow company releases the funds to the seller. This arrangement ensures that the seller isn't cheated out of his or her money, and it also ensures that the buyer does not hand money over, yet not receive what he or she paid for. It is a great idea to use an escrow service when the buyer and seller are not already familiar with each other.