What Is Escrow
Have you ever placed a wager with a friend, chances are you may have placed your money with a third party until the wager unfolds. When you make an offer on a property and its accepted your next step will be to make an escrow deposit usually 1% of the purchase price also known as a good faith deposit. This action lets the sellers know you are serious and intend to see this transaction through all the way to closing.
Usually a buyers escrow deposit will grab a chair in a non interest bearing account with the sellers brokerage. In the state of Maryland almost anyone can hold escrow so long as it is agreed to by all participants of the transaction. I personally prefer to place my buyers escrow with the sellers firm as it is the more traditional way to do so. In the case that a buyer may be utilizing an FHA loan this 1% deposit will count as 1% of your 3.5% mandatory down payment leaving the buyer to only need to bring the remaining 2.5% to the closing table.