An escrow is the deposit of a written instrument or something of value with a third person with instructions to deliver it to another when a stated condition is performed or a specified event occurs. The use of an escrow is most common in real estate sales transactions where the grantee deposits earnest money with the escrow agent to be delivered to the grantor upon consummation of the purchase and sale of the real estate and performance of other specified conditions.
Colorado Escrow Agreement for Sale of Real Property and Deposit of Earnest Money
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How to fill out Escrow Agreement For Sale Of Real Property And Deposit Of Earnest Money?
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The earnest money can be held in escrow during the contract period by a title company, lawyer, bank, or brokerwhatever is specified in the contract. Most U.S. jurisdictions require that when a buyer timely and properly drops out of a contract, the money be returned within a brief period of time, say, 48 hours.
Earnest money isn't always a requirement, but it could be a necessity if you're shopping in a competitive real estate market. Sellers tend to favor these good faith deposits because they want to ensure that the sale won't fall through. Earnest money can act as added insurance for both parties in the transaction.
Brokers must deposit earnest money funds into the escrow account promptly, interpreted by TREC to be within 2-3 business days of binding agreement date. When affiliate brokers receive earnest money, such funds should be paid over to the broker with whom they are under contract: Immediately upon receipt.
As soon as an agent or broker accepts an earnest money deposit on behalf of a seller, they become an escrow agent, and the money is placed in an escrow account. In most cases, when it enters into escrow, the earnest money cannot be released until both parties provide written permission.
In Colorado Springs, the earnest money is usually 1% of the purchase price. A home priced at $500,000 would typically ask $5,000 for earnest money. This $5,000 is credited back to the buyer at closing.
Earnest money protects the seller if the buyer backs out. It's typically around 1 3% of the sale price and is held in an escrow account until the deal is complete.
The broker must deposit the check into an escrow account within one business day of the seller or lessor's acceptance of the offer.
Account not later than five business days following receipt. All other money belonging to others which is received by a broker shall be deposited in such broker's escrow or trust account not later than the third business day following receipt.
Overall, homebuyers should expect to spend about two percent of their home's purchase price on closing costs. June 2021 data from the Colorado Association of Realtors pegged the average sales price of a single-family home at $530,000. In this case, closing costs would be somewhere between $5,300 and $10,600.
As a general rule, expect to pay between 2-4% of the final purchase price of your home in closing costs. Typical closing costs for Colorado buyers include transfer taxes, title fees, attorney fees, home inspection fees, and more.