When Does A Seller Get Money After Closing? A Guide
You’ve finally sold your house and are happy with the deal. Understandably, your next question is: When do I get the money after closing? It usually takes a few days to receive your money, but it can vary based on the closing process and how you choose to be paid.
Key Takeaways:
- The seller typically gets paid a few days after closing by wire transfer or cashier’s check.
- The remaining balance on your mortgage and closing costs will be deducted from the purchase price and paid out by the escrow agent.
- You can avoid delays in getting paid by working with your real estate agent to prepare all the necessary documentation in advance and keeping an eye out for fraud.
How Closing Works For Sellers?
It usually takes 30 to 60 days from accepting an offer on your home to closing the sale. During that time, the buyer will order a home inspection, and their lender will have the home appraised. If there are problems with either examination, it can delay closing or allow the buyer to use contingencies to cancel the sale.
At closing, the buyer signs the final loan paperwork to pay for the home, and the seller transfers legal ownership.
Here are some of the documents you may need to sign at closing include:
- Property deed. You’ll sign over this legal document to the seller to transfer ownership of the property.
- House title. The title denotes the ownership of the real estate. The title stays with the property and is transferred to the buyer.
- Bill of sale. This legal document confirms the sale and purchase of the real estate. It identifies the buyer, the seller and the property being sold.
- Closing disclosure: A document that outlines the terms of the sale, such as the sale price, closing costs, final mortgage payment and what the seller is paid.
- Statement of closing costs. This disclosure confirms the final closing costs.
- Affidavit of title: A statement confirming you are the home’s legal owner and that there are no liens or claims against the property.
- Loan payoff: A document from the lender that confirms the seller’s proceeds from the sale have been used to pay the balance owed on their mortgage.
- Transfer tax declarations: Some states require you to include a form that documents any property taxes that are due.
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Types Of Closing Transactions
The closing transaction is a little different in each state. The two main types of closing are dry funding and wet funding.
Wet Funding
Wet funding is by far the most common type of closing transaction and is required in most states. A wet closing occurs when all the paperwork needed to officially close on a real estate transaction, including payment of funds to the seller, is completed at the same time.
Because so many documents and procedures are required, and they all must come together in one day, wet closings can be less flexible.
Dry Funding
A dry closing is a type of closing where funds are disbursed a few business days – typically two to four – after the documents are completed and all mortgage lender’s requirements are satisfied. For this to happen, all parties involved in the transaction must agree that the closing can take place and that the documentation will be signed with the understanding that funds will be forthcoming. Within a few days of a dry closing, the lender funds the loan, and ownership of the home is transferred to the buyer. By this point, the ink on the closing is dry, which is how this type of closing got its name.
Nine states allow dry funding:
- Alaska
- Arizona
- California
- Hawaii
- Idaho
- Nevada
- New Mexico
- Oregon
- Washington
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How Much Will You Be Paid?
You will receive payment for the property’s full purchase price minus fees, closing costs, taxes and real estate agent commissions. These charges can add up to a significant amount for sellers, typically 5% to 6% of your home’s purchase price. Traditionally, the seller pays the commissions of both the buyer’s and seller’s agents.
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Loan Payoff
Once the escrow agent has collected all the necessary funds and signed documentation from both parties, they will pay out the money to all the parties required to clear the property title. This includes paying off the seller’s loan to that lender and any lienholders or service providers who are owed money. The seller will receive the remaining balance after those parties have been paid.
How Do You Get Your Money After Closing?
A seller typically receives the proceeds from a home sale 24 to 48 hours after closing. This can vary depending on your state and whether you choose to be paid by cashier’s check or wire transfer.
If you choose a cashier’s check, you can collect it in person, have it delivered by mail, or ask your real estate agent to pick it up for you. It may take a few days for the check to clear and the funds to be deposited into your account.
If you choose a wire transfer, the money usually appears in your bank account in a day or two.
Pros and Cons Of Wire Transfer
| Pros | Cons |
|---|---|
| •You’ll receive the money sooner in as little as hours. •Can be completed online. •Can be easier if you don’t plan to attend the closing in person. | •Typically costs more than a cashier’s check. •Cannot be reversed. •There can still be delays due to human error or bank hours. |
Pros and Cons Of A Cashier’s Check
| Pros | Cons |
|---|---|
| •Typically costs less. •Can be more secure than an electronic transfer. •Can be ready in as little as one business day. | •More potential for delays either from the bank or the mail carrier. •Less convenient. •You may have to visit a local branch in person. |
What Is Delayed Disbursement?
Sometimes, there can be a delay in the payment of escrow funds after closing. When this does happen, it’s often because of an issue with the lender’s underwriting or loan documentation. In extreme cases, it can be because the mortgage has fallen through due to an unexpected and significant change in the buyer’s financial situation.
If it’s been a week since closing and you still haven’t been paid, you should contact the escrow agent to find out what caused the delay and when you can expect to receive the money. Then, review the purchase agreement to see if there are any penalties for a delay that requires the buyer to pay you interest in the interim.
3 Tips For Getting Paid Quickly
Selling a home can take longer than you’d have hoped, and by the end of the process, you’ll be ready to collect the money from the sale. Here are some tips on how to get paid quickly after closing.
1. Work With A Real Estate Agent
There can be many benefits to working with a real estate agent to sell your home. An experienced real estate agent can help make sure that closing goes smoothly and efficiently. Your agent will make sure you have all the necessary forms completed and documents signed to avoid delays in the closing or payment process.
2. Hire An Attorney
If your payment is delayed due to an issue that is the buyer’s fault, they may have to pay you interest or penalties depending on the terms of your purchase agreement. If you think the buyer may be in breach of contract, you may want to contact a real estate attorney.
3. Watch Out For Fraud
Scammers and hackers use phishing tactics to pose as real estate agents, escrow agents, lenders, and title offices to intercept funds. Evolving technologies have allowed savvy scammers to prey on vulnerable sellers and fool them into handing over account information and routing numbers. Be suspicious of any last-minute correspondence informing you of any supposed changes in wire instructions, as this could be mortgage fraud. Double-check the recipient’s identity before giving away any account numbers.
FAQ
Here are answers to some common questions about how the seller gets paid after closing.
The Bottom Line
When the seller gets their money after closing on the sale of their house depends on how payment is made. The two most common payment methods are cashier’s checks and wire transfers. Even if you receive a check at the closing, you may not have access to those funds for a few days since it will take your bank a few days to process it. With a wire transfer direct to your account, you’ll likely have the funds by the next business day.
