When Does The Seller Get Money After Closing On a Home?

A common question when selling a house is when the seller will receive their money after closing, but there are several steps that must be completed before you can receive it. Most sellers can expect funds to reach their bank account within a few days of closing, but how quickly you get paid depends on the property's location and how funds are transferred.

When you’re ready to sell, your real estate agent can go over the process with you in greater detail. But in the meantime, it’s important to brush up on what happens during a home closing and when you can generally expect payment.

What Does The Closing Process Look Like For Sellers?

On average, it takes between 30 and 45 days to close on a home, and there’s a lot that happens from the initial offer acceptance to the closing date. The amount of time it takes will depend on you and on the lender you work with. For example, Rocket Mortgage^® closes nearly 2.5 times faster than the industry average.

After signing the purchase agreement, the timeline and stipulations for how the sale will proceed are laid out for the transaction. Next, your closing agent will order a title search to ensure the property's title is clear of any liens, judgments or other legal issues. This is a typical step in the closing process unless the buyer purchases the home in cash or uses alternative financing.

The buyer’s mortgage lender will order an appraisal on the property to make sure the value of the property is sufficient to justify the loan amount. If the appraised value of the home is less than asking price, then the buyer may need to make up the difference, negotiate a lower price or walk away from the deal.

Once you make it to the closing date, you’ll sign several legal documents to finalize the sale, including:

• Deed: Transfers ownership to the buyer.
• Bill of sale: Transfers ownership of any personal property included in the sale, such as appliances or furniture.
• Affidavit of title: A document stating that the seller is the legal owner of the property and that there are no legal issues that could affect the title.
• 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 is a disclosure stating that you acknowledge the closing costs.
• Loan payoff: A statement from the mortgage lender showing the amount of the final mortgage payment.
• Transfer tax declarations: Forms that are required by some states to document the transfer of ownership and calculate any taxes that are due. 

You may also have financial obligations at closing, like paying closing costs. Closing costs range from 3% – 6% of your home’s purchase price and typically includes any fees, taxes or related services that sellers must pay. Sellers often pay the commission of both the buyer’s agent and seller’s agent and sometimes part of the buyer’s closing costs – known as seller concessions. Seller-related closing costs are typically deducted from the home sale proceeds.

Funds from the home sale are held in escrow during this process until the sale is complete.

What Happens Before A Seller Gets Money From A Home Sale?

Before funds are dispersed, the mortgage lender evaluates the buyer's creditworthiness and financial situation to determine their eligibility for a mortgage loan, called underwriting. If the buyer is denied, then the sale can’t go through.

During the underwriting process, the buyer is required to provide detailed information on their personal finances, including income, assets and debts. The lender will verify this information by reviewing paystubs, bank statements, tax returns and verifying employment with the employer. They will also conduct an appraisal of the property to ensure it’s worth the amount of the loan. Also, the lender will pull the buyer’s credit report and calculate their debt-to-income (DTI) ratio to determine if they can afford to make the mortgage payments.

If the mortgage is denied, the buyer may be forced to back out of the sale. The buyer could also receive a suspended approval, which means additional documentation is needed to approve the loan. This can happen if the underwriter can’t verify the buyer’s income or employment status. Another common decision is a conditional approval where the lender just needs to confirm a few details.

After the mortgage is approved, the transaction is almost complete. On closing day, the lender funds the loan and pays the seller for title to the property.

What Does The Payment Process Look Like?

The seller gets their money after closing once everything is finalized and the closing agent uses proceeds from the sale to pay everyone what they’re owed. You can receive payment for the full purchase price of the property in the form of a cashier’s check or wire transfer, minus fees, closing costs, taxes and real estate commissions.

If you opt for a cashier’s check, you can receive it in person or have it delivered via mail or by your real estate agent. When you deposit the check at your bank, it could take several days for the bank to process the check. If you request proceeds to be wired to your bank account, it can take 24 to 48 hours to process, but it’s typically available by the next business day.

The process isn’t always the same in every state. When the seller received their money depends in part on whether the state they live in is a dry- or wet-funding state.

What Is Dry Funding?

A dry-funding state is a state where loan funds cannot be disbursed until all loan documentation has been reviewed, verified and approved by the lender. In a dry-funding state, the buyer and seller sign the loan documents in advance of the loan being funded.

Dry funding keeps the deal progressing and gives everyone the assurance that the transaction is legal. Slowing down the transfer of funds gives the closing agent extra time to get to the bottom of any issues and gives the lender additional time to collect closing costs. However, it affects when the seller gets paid for the home sale and when the buyer can move into their new home.

Most sellers and real estate agents prefer to see money on the day of closing. Funds are usually disbursed a few days after the documents are signed, but these conditions only apply in some states. Here are states that allow dry closings: 

• Alaska
• Arizona
• California
• Hawaii
• Idaho
• Nevada
• New Mexico
• Oregon
• Washington

While these states allow dry closings, you can choose either wet or dry funding, although the real estate agents involved in the transaction will ultimately decide.

What Is Wet Funding?

The remaining 41 states are wet-funding states. A wet closing is a traditional real estate closing where the title to the property is transferred and all financial obligations are settled at the same time.

Loan funds are disbursed to the seller and the title is transferred to the buyer on the same day. Although loan funds are available after closing, they may not be available until they’re processed by the bank.

What Is Delayed Disbursement?

A delayed disbursement is a situation where there’s a delay in the disbursement of funds to the seller and buyer after the closing has taken place. This occurs for a variety of reasons, including issues with loan documentation, underwriting or a mortgage falling through at closing.

Sellers have options if there’s been a delayed disbursement after closing.

First, contact the closing agent in charge of paying the seller after closing to determine the reason for the delay and ask when to expect payment. Make sure to review the terms of the purchase contract and look for any provisions that require the buyer to pay interest or penalties for delays. If a provision exists, you may be entitled to compensation for any losses due to the delay. Additionally, if the buyer is in breach of contract, you may want to consider contacting an attorney to discuss possible legal options.

The Bottom Line: When The Seller Gets Paid After Closing Will Vary

When the seller gets paid after closing will depend on the state where they live as well as avoiding any interruptions that would cause delayed disbursement. But sellers can expect to get paid within a few business days after closing. Even if funds are paid out immediately, it doesn’t mean the money is available in your bank account right away. It may take your bank a few days to process a cashier’s check or wire transfer.

If you're considering selling your home, you’ll want to know how much you can make from its sale. Learn how to calculate home sale proceeds so that you can be better prepared when it comes time to sell your home.