In the process of purchasing or leasing a commercial property? You may have come across the term “escrow”. Escrow is a contractual agreement where a third party handles or holds the money for a property until all terms on both sides are met. Once all the details are settled, the third party can then distribute the money as set out and complete the transaction. Purchasing a commercial property through escrow is viable and safe. It protects both parties from any double-dealing or devious actions because the money isn’t transferred over until all conditions are met. Here’s a little more about how the process of escrow works.
Whether you are selling or buying, the first thing you should do is find out the value of the property or business. You can do this by consulting with a real estate agent or by searching medical properties for lease. After you’ve gathered an estimate on your property or the property you’d like to purchase, decide on a minimum/maximum you’re willing to buy or sell the property for.
Next, look into an advertisement for the space if you’re looking to sell. If you’re working with a broker they will likely do a lot of this advertising for you. But it doesn’t hurt to pitch in as well. For example, make a clean-cut print out of the property with photos, amenities, and price. Then post it around local establishments.
After you’ve set up your advertisement or, if buying, found a few properties you are interested in, you will want to lay out all your conditions on purchasing/selling. If you are a seller, you’ll want to make your books, including tax returns, inventory, profit and loss statements, etc, all out in the open for buyers to see. This shows a commitment to honesty and trust. Once you have a buyer or a seller, you can negotiate a price. When you’ve come to an agreement, the escrow account will hold the money exchanged usually for 30 days or more. This is done to give both the buyer and seller an opportunity to make sure all the terms on the contract were met.
When closing a sale, the following must be fulfilled:
- All final documents signed
- Payment for the escrow account met
- All written conditions carried out by both parties
Once all of this is done, the funds in the escrow account may be released.
Types of Escrow
As mentioned above, escrow is typically used in commercial real estate situations. However, an escrow may be adapted for a homeowner as well. When a buyer moves into the home, they may choose to pay an escrow account to pay the mortgage lender. The lender then uses that money to pay property taxes and insurance. In this case, the mortgage lender has direct access to the escrow account. The benefit of using an escrow account in this situation is that it prevents the mortgage lender from falling behind in property tax or insurance payments. This usually means that a homeowner will have to pay about two months worth of expenses at first. This will, however, save you money in the long run. If you don’t have enough money in your escrow account, you run the risk of losing your insurance or home.
Business transactions that are done online are highly recommended to be secured by an escrow account. It is highly recommended that an escrow agent secure online business transactions. There are too many cases of fraud on the internet. Having an escrow account will help secure the safety of your business. It’s also a great way, as a buyer, to ensure that you’re getting exactly what you want and need out of a business purchase by setting out your conditions and making sure they are met before a payment can occur.
Medical Properties for Lease
If you’re searching for medical properties for lease, look no further than Boulevard Medical Properties. Visit our website today to view what we have to offer or a free quote from one of our experts.