What is a Binder in Real Estate?
Let’s face it, real estate transactions are complicated. If you have never bought or sold a home before, be prepared for jargon and strange financial terms that will have you breaking out your phone to find their definition.
What is a Binder When Buying a House?
When buying a house, a binder refers to formal and informal agreements leading up to the closing of the property. Because they’re used in many contexts, binders can be confusing. Most often a binder in real estate refers to the real estate binder, also known as an escrow or mortgage binder.
Title binders are temporary insurance coverages meant to protect both buyer and seller during real estate transactions. They’re most often used when the buyer and seller’s home insurance coverage don’t overlap – leaving the home vulnerable to unrecoverable damage. A title insurance binder is different from a title insurance binder or property insurance binder.
Title Insurance Binder
A title insurance binder involves a title insurance company looking through all available records to make sure there are no outstanding defects or problems with the home’s title. Title insurance binders are normally the buyer’s decision but recommended to protect your investment.
Property Insurance Binder
A property insurance binder is a document provided by a home insurance provider to prove temporary coverage until a finalized policy is completed. Property insurance binders are important for buyers and will likely be asked for by the selling agent and lending mortgage company before the rest of the purchase can move forward.
Are Binders Required?
What binders are required depends on the full sales agreement and individual requests. Binders are normally only applicable when parties agree to them to continue forward to the sale.
Can I Get My Binder Back?
If you handed over earnest money as part of your real estate binder and successfully close on the home, can you get your money back?
Real Estate Binder vs. Contract for Sale
If you’re using a real estate or escrow binder as part of a sale or purchase, it’s importance to know the distinction between binders and the contract for sale.
Answering Real Estate Binder Questions
We admit that the terminology behind real estate contracts can almost seem intentionally confusing, but The Storck Team wants to help with understanding binders and all other real estate related questions. Call a member of The Storck team to talk binders, buying or selling questions, and get the answers you need to make the right home sale or purchase today.