Ask Our Broker With Peter G. Miller: Wire Smarts
Question: We’re going to settlement next week. The closing agent has asked that we wire funds to them – what does this mean?
Answer: When you buy real estate the biggest issue that concerns sellers and lenders is that you’re able to complete the transaction. In part, this means you have enough cash to fund a down payment and all closing costs.
Lenders know you have the money because they’ve checked your accounts. Sellers know you have such funds because your loan was approved. If it’s an all-cash transaction, steps have been taken to assure you have the dollars to close the deal.
Everyone knows the money is there. You next have to move the money from your account to the closing agent. There are three generally-accepted ways to do this.
• You get a cashier’s check from your bank, which is payable to the closing agent. With a cashier’s check the issuing bank guarantees that the funds are available. The money comes from the bank so the check can’t bounce. The bank in turn takes money from your account to pay for the cashier’s check.
• A certified check is a payment from your funds that’s guaranteed by the bank. Naturally, the bank won’t certify a check unless the cash is in place to assure payment.
If you look at cashier’s check and certified checks, you can see they are physical pieces of paper. The must be moved from your bank to the closing agent.
Since we live in the electronic era why use checks at all? Why not pay electronically? Your bank can electronically send – or “wire” – funds to the closing agent’s account.
Bank policies regarding wire transfers vary. Speak with the bank well before settlement to assure you know how the process works and the requirements involved. Speak with the closing agent well in advance to know when the money has to be delivered.
And since we live in the electronic era, guess what? Crooks are trying to steal wire transfer money. The way it works is that you get a seemingly-official letter or email from the closing agent with wiring instructions. Everything looks correct but the account number has been changed so that following the “instructions” will actually send the money to the thief’s account.
If you want to wire funds to your closing agent that’s fine. Before sending the money, call the closing agent and confirm the wiring instructions. Is the information correct? Go through the particulars of the instructions, such as the recipient account, word for word and number by number to assure they are correct. Better to be safe than poorer.
Peter G. Miller is author of "The Common-Sense Mortgage," (Kindle 2016). Have a question? Please write to email@example.com.
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