What is the primary purpose of "escrow" in real estate transactions?

The primary purpose of escrow in real estate transactions is to hold funds or documents by a neutral third party until the conditions of a contract are met. This process ensures that both the buyer and seller fulfill their obligations before the transaction is completed, providing a level of security and trust in the process. The escrow agent acts impartially, safeguarding the buyer’s deposit and ensuring that the seller receives the payment once all terms of the agreement are satisfied. This mechanism helps to prevent any party from taking advantage of the other by ensuring that no funds or documents change hands until all agreed-upon conditions are fulfilled, making it a vital part of real estate transactions.