Formal steps and legal documents complete the sale of your house

By , Special to The Christian Science Monitor

The negotiations are finished and you've sold your house, you've signed the papers, and the deposit has been handed over. What happens now? you ask.

Well, someone has to draw up the necessary legal documents on the necessary forms, get the necessary notaries and signatures; and correspond with the title companies (in many parts of the US, at least), lenders, fire insurers, county recorder -- and the list goes on.

Who holds the money until after the deed is recorded? Who draws the notes and buys and sells them?

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It's escrow company, that's who.

To appreciate the function of the escrow company, consider the function that was missing from your childhood trades. If you were trading marbles for comic books, you would gradually let go of the marbles while you gradually took hold of the comic books. Your trading partner would do the same thing.

Even when trading with a friend, the human negotiator tries instinctively to protect his position until the trade is completed.

That, in effect, is what the escrow company can do for you.

You don't usually have to use an escrow company if you are willing to handle all the details yourself. However, the party providing the cash for the deal -- the lender -- will insist on escrow for its protection. Actually, even the seller is protected by an escrow arrangement because, without it, a person could conceivably deed over the ranch and never see the money for the purchase.

The fee charged for escrow services is usually nonnegotiable (I suppose anything is negotiable but escrow fees usually are not negotiated except for repeat business). However, competent, courteous escrow services can expedite a rocky transaction or hinder the completion of a smooth one.

Since the basic fees are very similar and may be established by law in some jurisdictions, why not use an escrow officer who is on the ball. If you know more than he does, he won't be of much help to you.

Most buyers and sellers make the mistake of letting the other person choose the escrow company. There are several possible advantages of choosing the company yourself, especially if you can negotiate that the cost be split between the buyer and seller.

A good relationship with an escrow officer may find you in the enviable position of knowing about short-term funding sources, alternate ways to complete the deal, the history of the property or the other party, which title insurers are quickest or most reliable, and so on.

Even in those area where the services of a lawyer are an absolute prerequisite for the transfer of property, a good escrow company is worth searching out and using. Find out from successful brokers who they use. Ask people who are active in the real-estate market to recommend a firm.

With a good escrow company holding the chips, you' ll find that you're ahead of the game.

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