Escrow services are just one of the many services we offer at Commercial Partners, and it’s oftentimes an essential aspect of the commercial real estate acquisition process. Because the escrow process can be a bit complex, misconceptions about escrow and the services that are provided to both the buyer and seller can exist. In today’s blog, we seek to debunk some common misconceptions about escrow services during a commercial purchase.
Myths About Commercial Escrow
Simply put, escrow is a process that ensures funds are allocated appropriately when specific deadlines and duties are met. No buyer wants to provide a large sum of money up front on the promise that the seller will make necessary improvements to their property prior to closing, and no seller wants to put a bunch of time and money into a property to have a buyer end up backing out of the sale. An escrow company like Commercial Partners will hold assets, funds and documents on behalf of all involved parties and ensure each entity follows through on their requirements to ensure a smooth sale.
Let’s look at some common misconceptions about the escrow process in the world of commercial real estate:
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Escrow Isn’t Required - There are instances where escrow may not be technically required, but it certainly may be if you’re choosing to finance your purchase with the help of a bank or financial institution. Even if it’s not legally required, it can make the sale process much smoother and protect the interests of both the buyer and seller. You can hope that the other party will act in good faith, or you can move forward with some reassurances that they will act in good faith because a neutral third party is handling the escrow process.
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Escrow Is Expensive - Bringing a third party into the equation won’t be free, but it can oftentimes more than pay for itself in terms of peace of mind and the increased likelihood that a sale will go through as planned and within specific deadlines. If you stand to lose out on a lot of money or potential profit if a sale isn’t completed by a specific date, bringing an escrow company aboard can help. Similarly, if you inherited commercial property and are looking to sell, a commercial escrow services company can ensure you move the property in a timely manner so that you’re not stuck paying taxes or tending to the property for months or years if a sale falls through or is delayed.
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Escrow Is Time Consuming - Sure, you could try to rush into a purchase without essential checks and balances in place, but that exposes you to an incredible amount of risk. By trusting the process to an escrow team, you have peace of mind knowing that funds are safe, work is being performed and critical surveys and assessments are being conducted. While some of these assessments will take some time to complete, we are very familiar with all the necessary processes that need to take place, and we can get the ball rolling on multiple aspects of the sale so that they can be completed in short order. If you tried to have all these processes completed on your own, it would be very time consuming and could easily lead to delays if you’re unfamiliar with some aspects of title and property inspection. Escrow services won’t help a sale push through in a week, but oftentimes they ensure a sale goes through much quicker than had you tried to effectively manage property research and assessments on your own.
Don’t let misconceptions about the escrow process lead you away from an incredibly valuable service that we offer to those looking to make their first or their next commercial purchase. Escrow services are just one aspect of what we bring to the table as a title company, and we want to ensure everything runs smoothly with your next commercial acquisition. For more information about escrow or other aspects of commercial investing, reach out to the team at Commercial Partners today at (612) 337-2470.