Acquiring payment from selling your home can be a tedious and arduous process, with multiple steps and timeframes that determine when you will finally see your funds after closing.
If you are wondering when does a seller get money after closing, dependency on whether a buyer pays in cash or finances their purchase and their location (wet funding vs. dry funding state).
Closing Date
Closing dates in real estate transactions are of critical importance – they mark when the seller officially transfers keys and ownership is officially transferred to the new homeowner!
As with any process, there can be unexpected hiccups during the closing process. Therefore, both buyers and sellers should set realistic timelines from the outset and be prepared for delays that may arise during closing.
Under COVID-19 pandemic conditions, it may not be safe to sign closing documents in person and could thus delay the process. Furthermore, other unexpected issues could arise such as changes to lender commitment or unexpected home inspection discoveries that must be dealt with promptly.
If a buyer can’t close on time (referring back to your contract for specifics), they could likely forfeit their earnest money and walk away from the sale; it may be more advantageous, however, to try renegotiate with the seller and renegotiate new terms of agreement.
Seller’s Earnest Money
Earnest Money Deposit – When purchasing a home, the initial deposit demonstrates to the seller your seriousness by showing up as promised and showing up to make their inspection appointment on time. Usually, this deposit represents a percentage of purchase price.
This deposit should be made via certified check or wire transfer and held in trust or escrow by either a real estate brokerage, title company, law firm, or another third-party, rather than given directly to the seller unless specifically stipulated in their contract.
If buyers back out after all contingencies have expired, their earnest money may often be returned as long as the property was listed pending for an adequate timeframe to enable home inspections and ensure any issues with it can be addressed prior to finalizing their purchase. Buyers should negotiate an extended contingency deadline so any issues with the home can be investigated thoroughly before finalizing their purchase decision.
Buyer’s Closing Costs
Buyer’s closing costs encompass a range of fees associated with buying a home, such as appraisals to verify property value, title search fees and the costs associated with transferring ownership from one party to another. Buyers also cover mortgage insurance premiums and property taxes when closing on a purchase.
Some charges are negotiable, though your ability to negotiate will depend on the market you are in. For example, some lenders provide discounts on closing costs to loyal customers.
Reduce closing costs by shopping around for the best rates and scheduling your closing at the end of each month to avoid paying one day’s interest on your new home purchase. Buyers can also ask sellers to cover some or all of their closing costs as part of a concession known as seller credit or seller contribution.
Buyer’s Closing Fees
Though buyers typically bear responsibility for closing costs, it is possible to negotiate these expenses. Some fees are one-time charges such as document recording fees which serve as official records of ownership changes; discount points paid directly to mortgage lenders to secure lower interest rates; and homebuyer insurance premiums can all be lump sum expenses that must be covered upfront.
Other costs borne by sellers at closing include real estate agent commissions, property taxes and title transfer fees – often prorated based on when closing occurs. It’s essential that all closing fees are explained clearly prior to signing a purchase agreement – any misunderstanding or push back when questioning certain fees could be an indicator. Use Houzeo’s Closing Cost Calculator for an easy overview of potential charges.
Seller’s Closing Costs
Sellers are responsible for some closing costs, such as mortgage taxes and bank attorney fees. Additionally, they must cover title-related fees like transfer taxes and the NYC mansion tax.
In a buyer’s market, sellers may find it beneficial to pay some of the closing costs as a means of attracting prospective homebuyers. It is important that sellers understand any lender restrictions which limit how much of an amount a seller can contribute towards closing costs.
Make sure that you request from your Realtor a seller net sheet detailing the estimated fees and expenses that may arise when selling your property, in order to prevent unpleasant surprises at closing time. Also note that closing disclosure documents become available three days before closing day so that you have enough time to review them for errors or discrepancies before the actual closing date arrives.
