A lot happens between the seller, buyer, lender, and title company when you sell a house, whether your personal residence or investment property. Money is exchanged, but so is a great deal of paperwork, all of which contributes to the bottom line.
How soon after the closing does the seller get paid? The answer is that it relies on numerous things, which I go over in more detail below.
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Seller Funds and Wet Closings
The majority of states have a ‘wet closing.’ This means that when everyone signs the closing agreements, the loan finances, which means sellers get paid after signing the paperwork.
A check is delivered at the conclusion of the transaction if it was requested. However, if you request a wire transfer, the day of the week and month may have an impact.
If you close on a Friday, for instance, the wire may not appear immediately until after the weekend, and if you close on the first, last, or 15th of the month, the wire may take an additional day or two to appear in your account.
It’s called a wet closing because it points out that the loan funds while the ink on the document is still ‘wet.’ Before the loan closes and cash is disbursed, the closing agent must ensure that all requirements have been met.
Seller Funds and Dry Closings
You will not receive your funds immediately if you live in one of the few states that exclusively allows dry closings. In contrast to a ‘wet’ closing, funds in a dry closing are not disbursed until the ink on the papers has ‘dried’ or a certain period of time has passed.
In a dry funding situation, lenders have more time to thoroughly analyze the buyer’s documentation before making a judgment. If any concerns with the paperwork arise after the loan is funded, the closer is responsible for resolving them.
Lenders in dry funding states have a few days to review paperwork and make any required modifications. It can take up to four days to get the money after a dry closing – this depends on the loan’s terms and how long it takes for them to be met before the closer can fund your loan.
Dry closing states are as follows:
- New Mexico
The other 41 states are all wet states, which means you receive the funds straight away.
Who Gives the Seller Their Funds?
The money for the closing is provided by your lender, but they are not disbursed by them. Before the closing, the lender pays the funds to the closing agent (typically a title company).
The funds are held in escrow by the escrow agent or title company until everyone signs the papers.
Before disbursing the money, the closing agent must review the documentation and ensure that all requirements have been met. Once the closing agent or the lender via the closing agent has cleared everything, they can distribute the money correctly, leaving you with your net proceeds.
Unless the closing agent has concerns or questions for the lender that need to be addressed first, this occurs while you are still at the closing table.
How Does the Seller Get Paid?
The seller can get paid in a number of ways:
If you request a check, you will most likely receive it shortly after the closing. The only thing the closer has to do is write the cheque.
Lenders have generally already wired the money to the title company at this point, meaning you can cash the check.
What are the drawbacks of selecting a check?
While a check gives you money directly after the transaction, your bank most likely keeps the money for a few days before clearing the check, particularly if it’s for a substantial sum. Because checks are becoming less prevalent, banks have to go through more procedures to clear them before releasing payments.
The majority of sellers prefer a wire transfer. A wire may take up to 48 hours to reach your account, but once it does, you can use it immediately.
Before requesting the wire transfer, check with your bank to see how long it takes them to process it. Most banks process wire transfers quickly so you can have your money right away, although there may be some lag time on weekends or other public holidays.
Your cash is wired immediately to your account by the bank, so all you have to do is wait for them to clear.
Why should you use wire transfers instead of other options?
There are several reasons for this, but the most important is the security it provides. Because wire transactions go through the banking system, there is a reduced risk of fraud.
You have immediate access to the funds with very little interruption.
The Final Verdict
On average, sellers are paid quickly, but based on your payment method, it may take a few days to receive the funds and be able to use them.
If you are utilizing the funds to buy a new property, make sure to schedule the purchase so that you have enough time to get the cash from the previous home cleared; otherwise, you may find yourself unable to meet your financial obligations.
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