Final answer:
The gross price is the total cost of a property paid by the buyer, while the seller usually pays the buyer's broker's commission. Escrow is a service that manages the disbursal of funds for home insurance and property taxes in a home buying transaction.
Step-by-step explanation:
In a commission split, the buyer pays the purchase price of a property while the seller pays the buyer's broker's commission. This means that the buyer is responsible for the agreed-upon price of the property, and the seller covers the fee for the buyer's broker.
In transactions like purchasing a home, an important concept to understand is escrow. During a home purchase, the buyer agrees to pay the gross price, which is the total cost of the property, and typically the seller covers payment of the buyer's broker's commission. Escrow comes into play as a third-party service that ensures the smooth transaction of these payments.
When money is deposited with an escrow agent, they hold it and then disburse it upon the completion of agreed-upon conditions, which often includes paying for expenses like home insurance and property taxes. This is beneficial as it consolidates these recurring expenses into your normal monthly payment, easing management and ensuring timely disbursement.