As home prices south of the border are going down the toilet or, as many argue, simply back to where they belong – an affordable level, in Canada this process has been delayed. This delay was quite predictable, as most economic developments in Canada generally follow whatever happens in the US with an average lag of eighteen months. As a result of this lag we see a significant discrepancy between the home prices in Canada and in the US.

While some experts believe that their prices are still far from reaching the bottom or even a reasonable level, compared to the astronomically overvalued real estate in most major Canadian cities, American real estate is a bargain. This situation has created a new phenomenon – crowds of Canadians crossing the border to hunt for real estate deals. Whether or not this is a smart thing to do is up to you to decide. But if you want to try, there are some differences in the way real estate transactions work in the US and in Canada that you should be aware of.

One of these differences is the home escrow which is a standard part of most transactions involving the transfer of real estate in the US. The essence of the escrow process is that there is an individual third party is involved in the sale which acts as an intermediary between the buyer and the seller. This party holds the funds until all the conditions of the transaction are met on both sides and there are written instructions both from the seller and the buyer to complete the transaction. The role of an escrow agent is usually performed by independent escrow companies licensed by the state in which they operate. They also perform other activities which are normally handled in Canada by real estate agents or lawyers. Such activities include title search to confirm the ownership, preparation of documents, assessment of the buyer’s creditworthiness, home inspection, etc.

You should exercise extra caution when choosing which escrow company to deal with. Escrow related scam happens in the United States frequently. Check if the company is properly licensed and registered. And if you can, try to deal with an escrow agent recommended to you by somebody you know and trust.

Nikolay Sisan is a Certified Financial Planner and freelance writer in Vancouver.