When you sell a house, either a primary residence or investment home, a lot goes on between the buyer, seller, lender, and title company. Money exchanges hands, but so does a lot of paperwork, all of which is important to the bottom line. So how fast does the seller get paid after the closing?
The answer is that it depends on a number factors we will break down below.
Wet Closings And Seller Funds
Most states have what’s called a ‘wet closing.’ In these states, the loan funds when everyone signs the closing documents, which means sellers receive money right away upon signing of the papers. If you requested a check, you’ll receive it at the time of final closing. But if you requested a wire transfer, the day of the week and time of the month may make a difference.
If you close on a Friday, for example, the wire may not show up right away or if you close on the 1st, last, or 15th of the month, the wire may take an extra day or two to show up in your account.
Wet closings simply mean the loan funds while the ink is still metaphorically ‘wet’ on the paper. It’s up to the closing agent to make sure all conditions were met before the loan closes and they disburse funds.
Dry Closings And Seller Funds
If you live in one of the few states that only allow dry closings, you won’t receive your funds right away. Instead of a ‘wet’ funding, the funds in a dry closing don’t get disbursed until the ink is ‘dry’ on the papers or a set amount of time has passed.
In a dry funding state, the lenders get time to review the buyer’s documents in detail before coming to a decision. If there are issues with the documents, the closer must take care of them after the loan is funded.
Dry funding states give lenders a few days to review the documents and have any necessary changes made. It can take as long as 4 days to get the funds after closing in a dry state. It depends on the conditions on the loan and how long it takes to clear them so the closer can fund your loan.
These states are dry closing states:
- New Mexico
The remaining 41 states are wet states and fund right away.
Who Disburses The Funds?
Even though your lender provides the funds for the closing, they don’t disburse them. The lender sends the funds to the closing agent (usually the title company) right before the closing. The title company or escrow agent holds the funds ‘in escrow’ until everyone signs the documents.
It’s the closing agent’s responsibility to look through the documents and make sure all conditions are met before disbursing the funds. Once everything is approved by the closing agent or the lender through the closing agent, they can disburse funds appropriately, leaving you with your net proceeds.
This usually occurs while you’re still at the closing table unless the closing agent has questions or concerns for the lender that need to be resolved first.
Ways To Get Paid
As the seller, you have several ways to get paid when you sell a home.
1. Wire Transfers
Most sellers request a wire transfer. It can take 24 – 48 hours for the wire to hit your account, but once it does, you’re free to use it.
Check with your bank before requesting the wire to see what their processing time will be. Most banks process wires right away so you have access to the funds immediately, but there may be some delay over weekends or other public holidays. The bank wires your funds directly to your bank account so there’s nothing else you have to do except wait for the funds to clear.
Why should you choose wire transfers?
There are a few reasons, but the top reason is the safety it offers. Wire transfers go through the bank system, so there’s a lower risk of fraudulent activity. Plus, you have access to the funds right away with very minimal waiting times.
If you request a check, you’ll likely receive it right after the closing has been completed. The closer doesn’t have to do anything except write the check. The lender already wired the funds to the title company, so the check is yours to take and cash.
What are the downsides in choosing a check?
While a check provides you with funds right from the closing, your bank will likely hold onto the funds for a few days before clearing the check, especially if it’s for a large amount. Checks are becoming less common and so there are more bank processes associated with clearing them before granting the funds.
On average, sellers get paid right away, but depending on your method of payment, it could take a few days to have the funds in hand and are able to use them. If you’re using the funds to buy another home, time the purchase of the new home so there’s time to get the funds cleared from the home you sold, or else you may find yourself unable to commit to your financial requirements.