During the process of buying a home, you'll encounter the word "escrow" in a few different situations. Let's take a look at what is escrow and how it can benefit you as a home buyer.
What Is Escrow? Here is a definition.
Usually, escrows are referred to as a financial instrument in which a third party holds an asset or escrow funds on behalf of two other parties who are preparing to close a deal. There are escrow accounts that may contain escrow fees managed by escrow agents, who hold funds or assets until they receive appropriate instructions or until certain contractual obligations have been met. Escrow can be used to hold money, securities, funds, and other assets.
In other terms, escrow is a method of protecting a transaction when two parties are involved and there is uncertainty about if one party will fulfill their obligations. The use of escrow is common in many industries, including Internet transactions, banking, intellectual property, real estate, mergers and acquisitions, and law.
Take an international company as an example. In order to receive payment, that company needs assurance that the goods will arrive at their destination. As for the buyer, he or she is willing to pay only if the goods are delivered in good condition. A buyer can place funds in escrow with an agent and instruct them to disburse them to the seller when the goods arrive in an appropriate condition. As a result, both parties are protected, and the transaction can be completed.
Escrow Accounts For Home Buying
If you are buying a home, your purchase agreement usually contains a good faith deposit. By putting down a deposit, you're showing that you are committed to purchasing the home. Usually, if a contract fails as a result of the mistake of the buyer, the seller gets to keep the money. In case of a successful home purchase, the deposit will be applied toward the down payment for the buyer.
To ensure both the buyer and the seller are protected, an escrow account will be established. The buyer will transfer the funds into an escrow account. The good faith deposit will remain in the escrow account until the transaction is closed. Once all conditions for the sale have been met, the amount in escrow is transferred to the seller.
Escrow funds are sometimes held past the completion of the sale of the home. This is called an escrow holdback. Escrow holdbacks may be required for a variety of reasons. For example, there might have been a deal you made for the seller to stay in the house for an extra month. Or, it's possible that you found something wrong with the property during the final walkthrough.
Additionally, buyer and seller will agree to use escrow if there is a condition attached to the sale, such as passing an inspection. In this instance, the buyer places the funds for the house into an escrow account controlled by a third party. Sellers can proceed with house inspections with confidence that funds are available and the buyers can pay for the house. When all conditions of the sale are met, the escrow money is transferred to the seller.
Digital Escrow Service In India.
Digital escrow services are offered by many companies in India. Among the most trusted is Vouch.
Vouch’s Digital Escrow service is a transparent way for buyers and sellers to build trust and secure a clean transfer of product and payment. Sellers can feel assured that they will be fairly compensated promptly, and buyers will feel confident that their order will be delivered as expected and on schedule. If you ever come across a fraudster asking for OTP, asking you to scan a QR code, or asking you to click on phishing links, you can simply say no and ask him/her to proceed with the transaction through Vouch.
Buyer Protection - When you purchase something of high value from an entity you do not know, there are many risks involved. There is no way to determine whether an entity is trustworthy, and you may be defrauded. Vouch offers you the assurance you need when you make a purchase. We won't release the funds to the seller until you've received the item and are satisfied with the transaction. In addition, we ensure the Seller provides tracking information, as appropriate, for the transaction.
Seller Protection - Vouch ensures that, as a Seller, you’ll receive your money once you deliver the promised goods and/or services. You are taking certain risks when you engage in long-distance selling. Even if you sell to an individual or business within your neighborhood, you're still going to be dealing with someone you don't know. With Vouch's robust and trusted payment method, you'll never have to worry about selling to an unknown entity.
Check back here to learn more about Escrow and how to protect yourself from fraud.
Safety is not just about protecting your credit, debit card number, and UPI accounts. It's about having control of your money till you've received the product or service you bought online!
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