What is an Escrow Company?

An escrow company is a neutral third party that holds money and assets on behalf of two or more parties involved in a transaction. The escrow company disburses the funds and assets to the appropriate parties once all of the terms and conditions of the transaction have been met.

Escrow companies are typically used in real estate transactions, but they can also be used for other types of transactions, such as business sales, estate planning, and child custody agreements.

Here is a general overview of the escrow process in a real estate transaction:

  1. The buyer and seller sign a purchase agreement and deposit money into escrow.
  2. The escrow company orders a title search and obtains all necessary documentation.
  3. The escrow company disburses the funds to the seller and the buyer takes possession of the property once all of the terms and conditions of the purchase agreement have been met.

Average escrow fees for a buyer using a loan in Maricopa County, Arizona (Phoenix metropolitan area):

The average escrow fees for a buyer using a loan in Maricopa County, Arizona vary depending on the purchase price of the property and the services that are provided by the escrow company. However, most escrow companies charge a base fee plus a percentage of the purchase price.

Here is an example of the typical escrow fees associated with a $500,000 home purchase in Maricopa County, Arizona for a buyer using a loan:

  • Base fee: $1,000
  • Percentage of purchase price: 0.5%
  • Total escrow fees: $2,500

Average escrow fees for a seller using a loan in Maricopa County, Arizona:

The average escrow fees for a seller using a loan in Maricopa County, Arizona vary depending on the purchase price of the property and the services that are provided by the escrow company. However, most escrow companies charge a base fee plus a percentage of the purchase price.

Here is an example of the typical escrow fees associated with a $500,000 home purchase in Maricopa County, Arizona for a seller using a loan:

  • Base fee: $1,000
  • Percentage of purchase price: 0.5%
  • Total escrow fees: $2,500

Do cash buyers or sellers typically save money on escrow fees?

Yes, cash buyers and sellers typically save money on escrow fees. This is because cash buyers do not have to pay for any lender-related fees, such as appraisal fees or loan origination fees. Additionally, cash sellers do not have to pay for any title insurance fees. As a result, cash buyers and sellers typically pay only the base fee and the percentage of the purchase price fee.

Here is a comparison of the average escrow fees for a buyer and seller using a loan and a cash buyer and seller:

Buyer using a loan (financed transaction): $2,500, Seller (financed transaction): $2,500

Cash buyer (cash transaction): $1,000, Seller (cash transaction): $1,000

As you can see, cash buyers and sellers typically save $1,500 on escrow fees.

It is important to note that these are just general estimates. The actual escrow fees for your transaction may vary depending on the specific circumstances of your transaction. It is important to consult with an experienced real estate agent and an escrow company to discuss your specific needs and to get an estimate of the escrow fees that you will be responsible for.