When Does a Seller Get Money After Closing?

May 21st 2024
The most exciting day for any seller is the day money comes in after closing. However, it can be tricky to understand when the money will arrive. When does the seller get money after closing? What day will it come? Who has the money, and what form will that money come in?

hash-markTable of Contents

When Does the Seller Get Money After Closing?
Disbursement of Funds at Closing: Wet Funding vs. Dry Funding
What Needs to Happen Before Payday?
Who Distributes the Funds at Closing?
How is the Seller Paid at Closing?
How Long After Closing Do Sellers Get Their Money Bottom Line

hash-markWhen Does the Seller Get Money After Closing?

The seller will get paid on the day of closing in most states, but it can take up to four business days for them to receive their money depending on where they live. This speed occurs because most sellers live inside wet funding states. However, if you live in a dry funding state, your timeline will look slightly different. Sellers in dry funding states will typically have to wait two to four business days to receive their funds. 

Let’s compare the two next to give you a better idea of the difference between wet funding and dry funding and why it takes longer to receive money in dry funding states. 

hash-markDisbursement of Funds at Closing: Wet Funding vs. Dry Funding

The main difference between wet funding and dry funding is the timeline for the disbursement of funds at closing. Nine dry funding states exist in the United States. These include Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, and Washington. The rest of the states are considered wet funding states. It’s essentially divided up into the west coast and the rest of the country.

Keep reading to find out how these funding scenarios work.

1. Wet Funding 

In a wet funding state, the mortgage lender gives the money to the seller immediately after the documents are signed. This allusion to wet ink on the paper lends itself to the name. You get paid right on the closing day rather than waiting.

This immediate funding provides several advantages. For sellers, it means they can quickly access their funds and move forward with their plans, whether that involves purchasing a new home, paying off debts, or investing.

For buyers, it ensures a smoother transition into their new property, as any potential delays related to fund transfers are minimized. The overall transaction process is more efficient and less stressful for both parties involved

2. Dry Funding

In a dry funding state, the mortgage lender looks at the buyer’s documents before paying the seller. Once they finish, the money goes to the seller. The ink has since dried on the page, hence the name.

This process introduces a short delay, usually taking two to four business days. During this time, the lender thoroughly reviews all closing documents to ensure everything is accurate and complete. While this extra step may seem inconvenient, it provides an additional layer of security for both the buyer and the seller, ensuring that all terms and conditions of the sale are fully met before any funds are transferred.

If you live in one of the nine states listed above, you will likely have to wait at least three days before receiving your payment. The reviewing may take no time at all, or it could take a long time. Of course, there are still a few things that need to get done before payday can happen. Let’s dive into those.

hash-markWhat Needs To Happen Before Payday?

Before payday, there are a few things that need to happen. These are critical to the speed of the disbursement of funds at closing. The more organized the closing process, the better equipped you will be to access your money when the home closes.

Here are a few of the items that need to happen before payday can carry out:

  1. Review the title, then clear it
  2. Get a home inspection
  3. Negotiate repairs and credit
  4. Get the home appraised
  5. Renegotiate
  6. Pay leftover debt
  7. Perform a final walkthrough
  8. Sign the last papers

These stand between you and receiving payment when your home sells.

Your agent will inform you what you need to do, where you need to sign, and what documents are required to complete the closing process. Your buyer will similarly receive direction to keep everything as simple as possible.

Now that you have your final checks done, who do you get the money from after the place has sold? Let’s talk about that next.

hash-markWho Distributes the Funds at Closing?

After a home sells, the money goes to the closing agent. This agent puts the money in an escrow account until the sale ends. From there, the closing agent will handle the disbursement of funds at closing to ensure you receive fair payment for your sale. They will take out fees that went into the selling process.

Your selling agent will give you two options for payment when the time comes to receive money. Let’s talk about these so you can decide which choice is the best one for your life before you close the house.

hash-markHow Is the Seller Paid at Closing?

There are two ways a seller gets payment at closing. You can receive funds in the form of a check, or you can get them directly inside your bank through a wire transfer. Both techniques vary in the time it takes for the money to go from the distributor to your bank. Therefore, it’s critical to know the difference between the time it will take for the payment to get to you.

Here is the time it will take with the disbursement of funds at closing with check and wire transfer:

  • Check: A check is the secondary action agents use to pay sellers. You will need to deposit the check at the bank. From that point, it can take up to seven business days for the money to appear in your account.
  • Wire transfer: This action is the one that sellers more often take. On average, a wire transfer will take about 24-48 hours for the funds to reach you.

These are the two routes agents take for the disbursement of funds at closing.

Once you have the money in hand, all the waiting will feel like it’s worth it. However, it’s critical to know how long each payment will take ahead of time so you can prepare for any financial gaps that could temporarily exist in your life while waiting for the cash to appear.

hash-markHow Long After Closing Do Sellers Get Their Money Bottom Line

Understanding the difference between wet and dry funding states is important for knowing when you'll get your money if you're buying or selling a home.

If you're a seller, you will often get your money at closing, but it could take up to four buisness days depending on where you live. While sellers that live in wet funding states can be paid on the day of the closing, it can still take a day or two for the checks to process and the money to clear.

In dry funding states, lenders will need to review all the closing paperwork before sending the payment, so it’s best to prepare so you can address any issues that may arise along the way. In order to make the payment, you can either write a check or wire the money. Writing a check is a more traditional approach and may be preferred by some sellers. It offers a tangible record of the transaction and allows for easy tracking of the payment.

On the other hand, wiring money is a faster and more secure option, especially for large transactions like real estate deals. With a wire transfer, the funds are electronically transferred from the buyer's bank account to the seller's account, typically on the same day as the closing.