Are you getting ready to sell or buy your first property? It’s exciting but also a bit stressful, considering all the paperwork and big money changing hands. To make this process easier and faster, you can hire an escrow agent. What’s an escrow, you ask? As providers of title and escrow serviced in New Jersey, we hear this question frequently from people new to real estate. And we are always happy to explain what it is, how it works and why you might need an escrow agent.

What is Escrow?

The term “escrow” refers to funds and paperwork that exchange hands via a third party during a high-value transaction, such as a purchase of real estate. These assets are held in an escrow account which doesn’t belong to any of the parties and is established to protect their interests. Look at it as a stepping stone during the process of transferring a property from one entity to another. Establishing an escrow especially helps during complex transactions where a lender is involved.

What does an Escrow Agent Do?

New Jersey escrow agentAn escrow agent, also known as escrow holder or escrow officer, is a neutral third party responsible for the escrow account. Your New Jersey title company can double as an escrow agent. One of the key responsibilities of an escrow agent is to hold the assets and make sure all the terms of the escrow are met before releasing them. This means that no property or funds change hands until both parties arrive at a mutually satisfying deal.

It’s important to understand that an escrow agent doesn’t facilitate the negotiations between the seller and the buyer—this is the job for attorneys and real estate agents. An escrow agent simply follows the instructions provided to him by the parties, making sure no funds or papers are released until the conditions of the deal are met.


An escrow agent can do the following:

  • open an escrow
  • process and follow instructions from all parties
  • hold buyer’s downpayment and loaner’s funds
  • pay bills as authorized
  • review all the documents and process the deed record
  • release property ownership paperwork to the buyer
  • release deposit to the seller
  • close an escrow

An escrow agent can work with property owners directly or coordinate everything via their legal representatives. When so many parties are involved, it’s not uncommon that the buyer and the seller never even get to meet each other.

Do You Need an Escrow Agent?

From the first glance, it might seem that an escrow agent is a passive, redundant role. After all, both buyer and seller can hold on to their own money and papers until it’s time to exchange, right? While it’s theoretically possible, you really don’t want to go into a real estate transaction without an escrow. What you will end up with is one of those movie scenes where two guys exchange a suitcase full of money for a diamond on the count of three. This is not the way to conduct high-value transactions. For this reason, banks typically require an escrow account when money is being borrowed to pay for the property.

Having an escrow makes the process go faster and smoother by using an impartial third party for conducting a transaction. Your attorney or real estate broker may recommend an escrow agent when the time comes, but you also have an option to choose one yourself.

Contact Armour Title Company today if you need a title agency or an escrow agent to facilitate your real estate purchase or sale.


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Atlantic County, Bergen County, Burlington County, Camden County, Cape May County, Cumberland County, Essex County, Gloucester County, Hudson County, Hunterdon County, Mercer County, Middlesex County, Monmouth County, Morris County, Ocean County, Passaic County, Salem County, Somerset County, Sussex County, Union County, Warren County