Escrow is a necessary process of buying rental property in Pennsylvania. It starts when the seller accepts a buyer’s offer. In Pennsylvania, escrow typically takes 30–90 days, depending on whether issues arise during the process.
Open an account
Real estate law requires that you open an escrow account to complete the transaction. A neutral third party oversees the account until the deal finalizes. The buyer deposits the money they would pay the seller into this account. Usually, the real estate agent of either the buyer or seller opens the account.
The buyer’s lender conducts an appraisal before approving a loan. If the lender values the home at a lower value than the buyer offered, then they could still receive the loan as long as they cover the difference. Other options are explaining to the lender why the home should have a higher value and trying another bank.
The law doesn’t require buyers to inspect the home before buying it, but it’s in their best interest. Sellers must disclose certain issues under state law. However, you may not want to rely solely on their word. State law may also not mandate disclosure of certain details that you would want to know. If you discover expensive repair needs from your inspection, you could ask the seller to fix them, negotiate a lower price or back out of the deal. Nothing is truly final until you close.
Just before closing, you may want to do a final walk-through of the property to ensure it’s still in the same condition as before. Closing is the stage where you sign the paperwork and receive the keys. You will also receive a deed that proves you are now the owner of the rental property. It’s important to obtain this document because you don’t legally own the real estate until you do.
Escrow isn’t as overwhelming as it may initially seem. It essentially involves opening the escrow account, inspecting the rental property and closing the deal.