Frequently Asked Questions about Closing Funds

How does a buyer bring money to closing?

Buyers can bring their funds to closing in one of two forms: a cashier's check or a wire transfer. A cashier's check is different from a personal check. With a personal check, the funds are drawn from the account holder's bank account, which means the check can bounce if the funds aren't available. A cashier's check is issued and guaranteed by the bank itself, so the money is confirmed before the check ever leaves the bank.

A wire transfer is also different from an ACH transfer, which is what most people are familiar with from direct deposits or online bill pay. ACH transfers move through a batch system, can take one to three business days to settle, and can be reversed in some situations. A wire transfer moves directly between financial institutions in real time, is verified in transit, and is final once it's sent. For those reasons, ACH transfers are not accepted for closing funds. Wires should be initiated through the buyer's bank 24 to 48 hours before closing to give the funds time to arrive. The morning of closing is rarely a safe window.

All buyers should remember that South Oak will never send wiring instructions over email. If a buyer receives an email that appears to contain wiring instructions from the title company, they should not act on it. Buyers should always call the title company directly using a verified phone number to confirm wiring details before sending any funds. Wire fraud schemes often involve scammers spoofing email addresses or hacking into agent or client email accounts, and verifying instructions by phone is the most reliable way to confirm the funds are going to the right place.

What counts as certified funds?

Certified funds are funds that have been guaranteed by a bank. The money has been confirmed to exist and set aside, which means the payment won't fail after it changes hands.

A cashier's check is one type of certified funds. The bank draws the check from its own account rather than the customer's account, so it can't bounce. A wire transfer is also a form of certified funds because the money moves directly between financial institutions and is verified in transit. Personal checks, business checks, mobile payment apps like Venmo or Zelle, and cash are not certified funds. Personal and business checks draw from the account holder's funds rather than the bank's, so they can bounce or be returned. Mobile payment apps move money between consumer accounts without a bank guarantee, and cash carries no verification or paper trail.

The requirement exists because the title and closing company disburses funds the same day to the seller, the seller's lender, the buyer's lender, and other parties involved in the transaction. If a payment fails or bounces after those funds have gone out, the title company is left covering the gap. Certified funds remove that risk.

Should a buyer use a wire transfer or a cashier's check?

Both a cashier's check and a wire transfer are acceptable, so the right choice often depends on the buyer's specific situation. A cashier's check is a good fit when the cash-to-close amount is known well in advance, the buyer's bank is local, and the closing is a straightforward transaction without complications like last-minute changes to the closing disclosure or seller credits being finalized close to the closing date. If the closing disclosure changes at the last minute, even by a small amount, the buyer may need to make a second trip to the bank for an updated check.

There's a workaround for that risk. Buyers can request a cashier's check for slightly more than the expected amount, and the title company will refund the difference at the closing table. That approach takes the pressure off late-stage adjustments to the cash-to-close figure.

A wire transfer offers more flexibility on the amount and the timing. The wire can be sent for the exact cash-to-close figure, and it can be initiated right up until the bank's cut-off time on the day before closing. For end-of-month closings, when figures often shift in the final 24 to 48 hours, wires tend to be the easier option.

Are there banking issues that can complicate closing day?

A buyer's banking setup can quietly complicate closing day if no one thinks to check on it ahead of time. The most common issues include:

• Daily wire limits, particularly at online-only banks
• Restrictions on new accounts or joint accounts that require dual authorization
• Banks that won't initiate large wires over the phone or online, requiring an in-person visit
• Advance-notice requirements for wires above a certain amount

To avoid any last-minute complications with financing, buyers should call their bank at least a week before closing. That conversation should cover whether the bank can send a wire for the expected amount, whether any in-person visits are needed, and whether any holds or limits are in place on the account. Most banks can accommodate the needs of a closing without issue, but only when the buyer makes those arrangements in advance.

How do sellers receive their proceeds?

Sellers typically receive their proceeds one of two ways: a wire transfer sent directly to their bank account, or a check from the title company. Wires are faster and tend to be the preferred option for most sellers, particularly those who are using their proceeds to purchase another home shortly after closing. Sellers can also receive their proceeds in the form of a check, but the receiving bank may place a hold on the funds depending on the amount, which can delay access by several days.

South Oak typically disburses proceeds within 48 hours of signing, though wires often go out same-day when everything is in order. The exact timing varies by transaction and depends on what still needs to happen after both the buyer and seller leave the closing table.

Why don't seller proceeds release the moment closing is finished?

Many sellers wonder why their proceeds aren't in their account the moment they sign. The seller has signed, the buyer has signed, the keys have been handed over. Why isn't the money there yet?

The short answer is that several steps still have to be completed before the title company can release the seller's proceeds. The buyer's lender has to confirm that all of their conditions have been met and release the funds to the title company. South Oak's post-closing team has to send documents to the funding office, wait for a funding number, and receive approval to disburse. None of those steps are optional, and the timing varies from one lender to the next.

There's also a structural reason the funds can't be released early. All funds for a real estate transaction are held in an escrow account, which is a separate, regulated account that title companies use specifically for transaction funds. Money goes into and out of the escrow account for each specific closing, and once the closing is complete, post-closing tasks move the funds out of the account to the appropriate parties.

The escrow account for each transaction must zero out, meaning every dollar that came in for that transaction has to go back out to pay off the seller's mortgage, the seller's proceeds, settlement fees, and any other items on the closing disclosure. The title company cannot use funds from one transaction's escrow account to pay out another transaction's proceeds. The funds for a seller's proceeds have to actually arrive in that transaction's escrow account before they can be sent out.

What if a seller is using their proceeds to buy another home?

If a seller is using their proceeds to buy another home immediately after closing, wires are strongly preferred. A cashier's check technically doesn't clear until the next business day, which can delay the second closing if it's scheduled close to the first. A wire moves the funds with verification in transit, which keeps the second transaction on schedule.

There's an additional advantage when both closings happen at the same title company. The proceeds from the first closing can be applied directly to the second transaction, without an outside wire to a different office. That saves time and reduces the risk of timing issues.

The buyer's lender on the new purchase will also likely request a copy of the sale closing disclosure to verify the source of funds before releasing financing. Sellers should be ready to provide that quickly.

How are wired funds protected from fraud?

South Oak takes active steps to protect client funds from wire fraud. All wire transfers, including funds wired in by buyers, proceeds wired out to sellers, and mortgage payoffs, go through CertifID. CertifID is a secure platform that allows the title company to share verified wiring instructions with clients and confirm the identity of all parties involved in a wire transfer. Because CertifID handles wiring details through its own platform rather than over email, it removes the most common point of vulnerability for wire fraud schemes.

Each transaction is insured up to $2 million, with the option to send multiple wires when a transaction exceeds that amount. South Oak covers the per-transaction fee, so clients receive the protection at no additional cost.

What tips can agents share with clients before closing day?

A few short conversations in the week before closing can save clients real time and stress. South Oak recommends a few simple tips about closing funds agents can share with their clients in the week before closing:

• Call the bank ahead of time. Buyers should confirm the bank can send a wire for the expected amount and ask whether anything else needs to happen first, like an in-person visit or advance notice on a large transaction.
• Bring extra for end-of-month or busy-season closings. The final cash-to-close figure may not be set until the last day or two. Rather than waiting for the exact number, buyers can bring extra and receive a refund at the closing table.
• Initiate wires 24 to 48 hours before closing. Wires take time to process and verify, and same-day transfers can hit delays that aren't visible from the buyer's side.
• Verify wiring instructions by phone, not email. Buyers and sellers should always call the title company directly using a verified phone number to confirm wiring details before sending or receiving any funds.
• Reach out to the title company with questions. Closing involves a lot of moving pieces, and South Oak's team is happy to walk clients through any part of the process that isn't clear.

Money questions are part of every closing, and clients tend to feel a lot better when they know what to expect ahead of time. South Oak's team is happy to answer questions from agents and from buyers and sellers directly, whether the question is about wiring details, timing, or any other concerns that arise during the transaction. Contact us to learn more, or order a title and schedule a closing today.