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You may have a basic understanding of how the home selling process goes. You put your home on the market, court buyers, field offers, accept an offer, and then go through closing. All sounds pretty simple, right?
But when does the seller get money after closing? When so much money is changing hands, you can’t just check your bank account after signing the closing papers and see a massive balance, right?
No, the process is not immediate. The time it takes to get your money after selling your home depends on a few factors. You will get paid after completing the closing process but the time it takes varies between states and situations. Obviously, as a home seller, you want to know when you’ll get your money after selling so we’re here to tell you. Read on to learn what factors impact how fast (or slow) you will get your money after selling your home.
How does closing work for sellers?
After you accept an offer to sell your house, the closing process begins. Assuming the buyer is using a mortgage, this process typically includes a home inspection, a title search, negotiating any final details, and the final loan approval. It can take anywhere between four to six weeks, or can be much quicker if the buyer is paying cash or using alternative funding.
Before tackling all this, you and the buyer will agree on a closing date at which you’ll sit down, all closing steps handled, and sign the closing documents to finalize the sale. If the buyer and their lender fail to complete all necessary steps or the buyer can’t get loan approval, the process may be delayed and you might have to move your closing day.
Closing day is where you and the buyer sign all the final paperwork, settle the deal, and physically transfer documents of ownership. It can take an hour or much longer depending on how prepared and motivated you and the buyer are to get the deal done as efficiently as possible.
Closing can take a while, so if you want your money as fast as possible, working with a real estate agent and attorney can help you through this entire process and ensure a smooth closing day so it all goes as fast as possible.
When does the seller get money after closing?
After the closing process, the biggest determining factor of when you’ll get your money after selling your home is where you live. The process goes through what is called wet or dry funding. Most sellers live in wet funding states, which pay on closing day. Dry funding states may take much longer after closing to process payment.
There are only nine dry funding states: Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, and Washington.
How you choose to get paid (wire transfer vs. check) will also impact the time it takes to get paid after closing. But before we get there, let’s talk about funding.
What is wet funding?
When a mortgage lender makes the money for a purchase available as soon as the buyer signs their loan documents, that’s considered wet funding. The ink is still wet on the page, hence the term. That means that as soon as the documents are signed on closing day, the lender can send funds to your closing agent.
What is dry funding?
Dry funding gives lenders more time to review a buyer’s signed loan documents before actually approving the loan. After signing documents on closing day, the lender will take some time to review all of the loan documents before actually approving the release of funds. As such, the ink is dry by the time the lender formally closes the sale and sends money to the seller.
How long does it take to get paid in wet funding states?
As we’ve stated, closing takes time. Once you and the buyer have settled, signed all the documents, and your deed or title has been recorded by your county of residence, you can receive payment almost immediately.
But there is often a gap between when the documents are signed and the deed or title being recorded, as well as a gap between the deed being recorded and funds being released. This is just due to human limitation — somebody with the county has to physically record and document this transaction and they might not be immediately available.
Regardless, as long as all of your documents are filed and recorded before your bank stops receiving new requests for the day, you should be able to get your money within a few hours. It’s a good idea to schedule your closing day in the morning if you want the money that day.
How long does it take to get paid in dry funding states?
In a dry funding state, you may have to wait up to four days after the closing date to get paid. If you need liquidity to put a down payment on a new home, this could cause some problems. Make sure to consider this delay when scheduling your closing date for your new home since you may need the proceeds from your previous home to make the down payment for your new one. Orchard can help you with the planning process to ensure you don’t miss a beat while moving from your previous home to a new one.
You could also consider making a contingent offer on a new home. This just means that you won’t be able to close on a new home until you’ve received the proceeds from the sale of your current property.
Choosing between a wire transfer or a check
When you close, the money transfers to an escrow account managed by a closing agent. The way you choose to receive your funds from your closing agent can impact how long it takes to get your money after selling your home. Some sellers choose a wire transfer, others prefer a paper check.
Getting paid by wire transfer
Wire transfer is generally considered the faster and safer payment option. It’s also the most common. Wire transfers can take between 24 to 48 hours to process, but the money is usually available in your account as soon as the bank processes it — often the same day that it’s received.
Again, there could be a delay based on when the bank receives the transfer. If it comes in after the bank’s cutoff time, it won’t process until the next business day, so it’s best to close during banking hours.
Getting paid by check
Wire transfers aren’t perfect, however. Wire fraud exists and giving banking information over the phone or internet can be risky. A paper check offers the security that it’s very unlikely to be stolen and cashed by somebody else. (It’s also just pretty cool to hold a check for an enormous amount of money, let’s be real.)
But you can also very easily misplace a check. In addition, you’ll still need to manually deposit a check with your bank. A bank can hold that deposit for up to seven days to ensure secure processing, so you may have to wait even longer to access your money.
The biggest factor that determines when you’ll get your money after selling your home is simply where you live. Dry funding states take considerably longer to process home sale proceeds than wet funding states do. But you can also expedite the process by ensuring a smooth, delay-free closing process, meeting bank cutoff times, and by opting for wire transfers rather than a check. It’s your money after all, who can blame you for wanting it faster?