For many people, paying the seller is the first priority when purchasing a property. While there are many payment options to choose from, sending funds through a wire transfer is a fast and convenient option. If you’ve never used a wire transfer to pay for closing, here’s how it works.
A money wire transfer is a form of electronic fund exchange or payment between two banks – from the sender’s bank account to the receiver’s for escrow closings. Wire transfers are immediate because they don’t pass through a clearing house. It’s an ideal payment option for different scenarios where large amounts of money are sent or received on the same day or within hours, such as:
- Large purchases
- Real estate transactions
- Law office payments.
- Paying off a large loan
- International transactions
Yes. Closing wire transfers are a preferred way to pay closing funds. The money typically arrives the same day or within 24 hours. You can wire transfer the funds through your bank or a third-party service, like TransferWise, Western Union, or Xoom. Wire transfers are a common payment in real estate for four key reasons:
- Speed: The money arrives quicker than many payment options, within 48 hours.
- Convenience: You can initiate a Wire transfer online, over your phone, or at the bank.
- Security: Electronic wire transfers are secure because they don’t require cash or physical checks.
- Savings: Wire transfer is also a good way to save money when buying a house because it’s less expensive and reliable.
Care should be taken on wire transfers, as they’re often a target for scammers and online frauds.
Typically, you’ll wire the money a day or two (business days) before the closing date. However, the exact day is always in your closing disclosure, which you often receive three days before the closing date. Your realtor should guide you through the wire transfer process when wiring money so that your closing wire transfer doesn’t stall your house-buying process.
However, you should confirm when the money wiring should be done and how much to wire. Usually, you don’t want to leave the wire transfer at the last minute. You never know what technical issues may come up and delay the process.
Wire transfer in real estate is different from individual/personal wire transfer. A personal or individual wire transfer usually takes 24 hours (one business day) or less. However, in a real estate transaction, the money has to pass through an “escrow account,” which can delay the process.
An escrow account holds the funds until the necessary closing contractual terms are met, then releases them to the recipient. When you wire the money to escrow, the seller may receive it between two to four business days because it involves two wire transfers.
In general, you don’t usually want to waste any time during closing. The type of payment you provide at closing impacts how you complete your home purchase. Wire transfer is allowed and is quick, convenient and reliable.