PSI Virginia Real Estate Practice Exam

What role does an escrow agent play in a real estate transaction?

1. They solely represent the seller's interests

2. They provide legal advice to both parties

3. They secure the property and review documents

4. They finalize the sale without involving the buyer

The correct answer is: They secure the property and review documents

The role of an escrow agent in a real estate transaction is crucial and multifaceted. An escrow agent acts as a neutral third party who holds and safeguards funds and documents until the transaction is completed satisfactorily for both the buyer and the seller. This position allows the escrow agent to facilitate the exchange of necessary documentation and funds, ensuring that all contractual obligations are met before transferring ownership. By securing the property and reviewing documents, the escrow agent contributes to the smooth progression of the transaction. They verify that all requirements defined in the purchase agreement are fulfilled, such as inspections, repairs, financing, and title clearance. This helps to prevent disputes and builds trust between the parties involved. In contrast, the other options describe roles and responsibilities that do not accurately align with those of an escrow agent. For example, solely representing the seller's interests does not reflect the agent’s neutral position. Providing legal advice is outside the scope of the escrow agent’s role; they are not licensed to give legal counsel. Finalizing the sale without involving the buyer undermines the very essence of ensuring a fair and equitable process in real estate transactions. Thus, the correct answer encompasses the escrow agent's critical function in securing assets and ensuring that all necessary documents are reviewed and handled appropriately prior to closing