Escrow Agents & Risk Management Strategies | Advice From An Agent

Commercial real estate transactions can be more complex and therefore carry considerably more risk with them. Large purchases or sales can make or break the success of a company, so mitigating risk should be one of the primary concerns for all parties which is why the escrow process is commonly used.

Escrow agents are experienced in overseeing the faithful execution of a transaction documents, holding and dispersing of funds so that all parties are satisfied or, should irreconcilable issues arise, are insulated from the risk of loss.

Escrow agents help manage the risk associated with commercial real estate deals as a neutral third party whose only interest is that the purchase contract obligations are upheld on all sides. Escrow management is key to a properly executed escrow process and brings several advantages to the parties involved.

Expertise in Commercial Real Estate Transactions & Escrow Agents

An escrow agent well-versed in commercial real estate transactions can thoroughly review and understand the nuances of a purchase contract. They know what to look for and can identify potential issues that an inexperienced agent may miss. This attention to detail helps ensure the transaction proceeds smoothly and all parties’ interests are protected.

An escrow agent’s primary job is contract compliance, it’s bringing a neutral third-party compliance expert to review and oversee the contract.

Escrow Management & Familiarity with Complex Asset Classes

Commercial assets such as real estate, personal property, and intellectual property all involve additional layers of complexity, many of which are in a state of change (appreciation, depreciation, etc.), making their sale that much more difficult.

Using the right professional can make these complex transactions easier to understand and navigate through.

Specialized Industry Network and Contacts

Bringing in a neutral expert to confirm contract stipulations such as inspectors, accountants or assessors, is common with commercial transactions and can be agreed upon before or during the escrow process.

Top commercial escrow agents have established networks and contacts within the industry that can be invaluable resources should the parties need assistance in finding these experts. They can leverage these connections to gain insights, resolve issues efficiently, and ensure compliance with all relevant regulations and processes.

In-Depth Market Knowledge & Risk Management Strategies

Commercial escrow professionals deal with a wide range of property and asset transactions regularly. This gives them an in-depth understanding of current market conditions, trends, and analyses that can benefit all parties involved.

This wide exposure makes escrow agents a resource for answering contracting questions and providing expert guidance throughout the transaction . Seasoned commercial agents can offer personalized expertise and risk management strategies that go beyond just facilitating the transaction.

What To Look For In An Escrow Agent

Beyond a reasonable fee and responsive customer service, finding an escrow company for a business requires more due diligence than a typical residential real estate escrow. Specific considerations include:

Specializes in business purchase contracts – Look for an escrow agent who has specific expertise in handling complex commercial transactions beyond just residential real estate.

Track record and strong reputation – Research the escrow agent’s history, how long they’ve been in business, and their reputation for professionalism and successful transactions.

Robust security protocol – The agent should have rigorous protocols in place to safeguard funds, assets, documents, and sensitive information held in escrow.

Comprehensive escrow services – Evaluate if the agent can handle all aspects of the escrow process you require, such as contract review, due diligence, fund distribution conditions, etc.

Depth of resources – A well-established escrow company with ample staffing and financial backing can better handle complex, high-value transactions.

Have questions about your upcoming commercial transaction? Contact us to speak with one of our experienced escrow agents for personalized guidance.