Understanding the Timeline–When Sellers Receive Payment After Closing

Selling a home is a huge financial transaction with lots of small pieces and moving parts. One of the most common questions sellers have is when they will receive the proceeds from the sale. The process involves several steps, and the timing can vary based on several factors, including the property’s location and the method of fund transfer.

The Closing Process for Sellers

Closing on a home typically takes between 30 and 45 days from the acceptance of the initial offer. This period allows for the necessary steps to be completed, including title searches to ensure there are no liens or legal issues with the property, appraisal to confirm the home’s value, and the finalization of the mortgage process for the buyer.

Key Documents and Obligations

At closing, sellers will sign several important documents, including the deed, bill of sale, affidavit of title, closing disclosure, and others that transfer ownership and outline the terms of the sale. Sellers may also be responsible for certain financial obligations, such as closing costs, which can range from 3% to 6% of the home’s purchase price. These costs typically include fees, taxes, and commissions and are deducted from the sale proceeds.

The Disbursement of Funds

After closing, the funds from the home sale are held in escrow until all conditions are met. Once everything is finalized, the closing agent disburses the proceeds. Sellers can receive their payment through a cashier’s check or wire transfer, minus any outstanding fees, closing costs, and real estate commissions. The choice between a cashier’s check or a wire transfer can affect how quickly funds are available, with wire transfers generally being faster.

Dry Funding vs. Wet Funding

The timing of when sellers receive their money can also depend on whether the state is a dry-funding or wet-funding state. In dry-funding states, loan funds cannot be disbursed until all loan documentation is reviewed and approved, which can delay when sellers receive payment. Wet-funding states allow for the disbursement of loan funds on the day of closing, although the funds may not be immediately available until processed by the bank.

What If There’s a Delay?

Delayed disbursement can occur for various reasons, such as issues with loan documentation or underwriting. Sellers should contact the closing agent to understand the cause of the delay and the expected timeline for payment. Reviewing the purchase contract for any provisions regarding delays can also provide guidance on potential compensation for any inconvenience.

Conclusion

While most sellers can expect to receive their funds within a few days of closing, the exact timing can vary. Understanding the closing process, including your state’s funding practices and the potential for delays, can help set realistic expectations for when you’ll receive the proceeds from your home sale