How Fast Do You Get Money After Selling House?

You’ve got your property listed on the market. After a few months of doing all the things you can do based on an article about how to sell property fast, someone got interested and checked your property online. They said to themselves that the property might be potentially a great deal, and moments after inspecting the property details on the listing, they decided that they might want to get the house.

What’s next after that? When will you get your money? How fast do you get money after selling house? Continue reading to find out.

Closing date

The closing date is the final step of the process and determines when you’ll get your money. The faster you can close the deal, the faster you can get the money. After closing, your property becomes owned by the buyer and the money will be heading your way.

Unfortunately, there’s no guarantee that you’ll get your money the same day as the closing day. The closing process can be a bit tedious and may delay your pay for a few days, but, fortunately, most of the legwork will be the buyer’s responsibility now.

Once the buyer secures and signs everything, the money will go through an escrow. The escrow basically keeps the money and the document on hold until the deal is finalized. Depending on the form of payment you have agreed upon with the buyer, the escrow will be the one that will deal with you.

If the payment method is a wire transfer, you can wait 24–48 hours before getting the money. On the other hand, a check may allow you to get your money after a week or so. And while a check takes a bit of time, it’s more recommended that you use this payment instead to avoid wire fraud.

While it’s good to be excited for the closing date and your money when someone tells you that they’re interested with your property, set your expectations low a bit. Know that it can take a lot of time before you can have your money or even establish a closing date because of a few factors. Some of those are below.

Inspection or due diligence period

One of the main factors that can push back the closing date is the inspection period, often referred to as the due diligence period by business-savvy folks. On average, the inspection period may take up to 10 days.

The due diligence period is when the buyer will have the opportunity to investigate the product they’ll buy—or in this case, the property on sale. Typically, buyers will visit the property in person and get a few professionals to get the house to undergo different inspections. Some of the types of inspections your property may get subjected to include the following:

  • Pest inspection: Buyers want some peace of mind before they say yes to a property, and one of the things that they want to make sure is that bugs and rodents won’t invade them during their stay in their potential new home.
  • General home inspection: Besides personally checking the property, a buyer may hire a home inspector to get a professional take if a property is worth its price tag. These inspectors focus on finding health risks and safety concerns through visuals alone during a general inspection. Even if the home passes a pre-listing inspection, the buyer’s inspector may still fail the property and discourage the buyer from going through with the sale if they find anything off.
  • Analytical inspection: If the house is a bit old or may require a lot of money, a buyer may ask a home inspector for an analytical inspection. It involves scrutinizing every nook and cranny of a property using professional tools. Inspectors usually focus on building leaks, moisture infiltration, and gas leaks.

Almost 88% of home buyers hire a home inspector to scrutinize the property they’re interested in. And nearly 86% of those people were able to find problems in the home thanks to the inspectors they hired. So, be sure to fix everything in your home to prevent delays. (1)

Title review

After or before the initial inspection, an intelligent buyer may perform a title review. It’s a process wherein the buyer will perform a title search. The goal is to know if you, the seller, actually and legitimately own the property you’re selling. Typically, this might take two weeks, depending on the title company that’ll handle the review. If problems are found, the duration might take longer.

Buyers want to ensure that the property doesn’t come with baggage—like being collateral to your debt. There are at least 47 ways to make your home sell faster, and making sure your property won’t fail the title review is one of them.

A title review can also help the buyer determine if you have the complete authority to sell the property. Properties can have multiple owners, and when this usually happens, a single owner can’t sell the property without the approval of the others, especially if they’re still living in the house.

If you and some of your kin will inherit the house you want to sell, you may want to get the probate process done quickly if you don’t want the title review to delay the sale.

Review of Homeowners Association situation of the property

Around 53% of homeowners live in an HOA neighborhood, and almost 80% of new homes constructed in the last decade are part of an HOA. So, if you’re in an HOA, you’re mostly aware of the agreements and monthly contributions you’ve been dealing with during your property’s ownership. And like most people, your buyer might feel skittish if they discover that the house is under an HOA since there are many horrifying stories surrounding HOAs. (2)

If your buyer isn’t really fond of HOAs, be sure to prepare yourself. After all, when a buyer buys a home that’s part of an HOA, they’ll also become a member of it. In addition to acquiring the responsibility of paying the monthly contributions and benefiting from the perks and amenities, they’ll also be responsible and liable for all the policies the HOA has for its members.

Depending on how stringent or annoying your HOA is, the buyer may run to the hills and forget about the deal. Because of that, be ready to read up on your HOA documents to help the buyer with its review. Telling them about your experience and letting them know how the HOA operates may raise your chances of them accepting the circumstances and going through the sale.

Dealing with a buyer who doesn’t want to join an HOA but really wants your property can significantly add up to the time you’ll need to wait until you can close the deal. There’s no definite statistics for this one, but you can expect that it can definitely cause a delay.

Negotiation

According to real estate agents, a buyer and a seller usually spend one to three days negotiating the property. This phase may happen after—often before—the other stages of the due diligence period. Regardless of when it happens, it’s a clear indicator that the buyer is interested; however, it’s not a guarantee of a sale.

During the negotiation phase, you and the buyer will have a lot to talk about: financing, appraisals, inspections, price, closing date, and contingencies. During it, the buyer will primarily focus on the financing and price. And the latter makes or breaks the deal.

As much as possible, it is to you and your buyer’s benefit to get through this phase sooner than later. The longer it takes, the lower the chance of the deal happening. The key is to end the negotiation with a purchase offer or contract as soon as possible.

If the inspections come after the negotiation phase, which is almost always the case, know that negotiations may open up again even if you already have a purchase offer. And even if there’s a signed closing date, understand that any problems encountered during negotiations, appraisal, or inspection can quickly push the closing date for typically 30–45 days. It is to your best intentions to prevent those hiccups from happening for you to expedite the cash you’ve been waiting for.

Disasters and accidents

In addition to renegotiations and problems after inspections and appraisals, disasters and accidents could be another potential cause of delay. Holidays can also push the closing date back, and even family emergencies are always respected during a sale.

Loan approval

Once everything goes through without a hitch or all issues are resolved, you and the buyer will be left at the mercy of financers. Even if you want cold hard cash and the buyer has all of it in a briefcase lying somewhere, you can’t proceed with the transaction without the involvement of a mortgage loan.

Know that it’s the top reason real estate transactions get delayed. Unfortunately for you, as the seller, you have no direct control over this. It’s entirely up to the buyer and their actions preceding the purchase contract. If they got pre-underwritten or preapproved for their loan, you could expect that there’ll be little chance of delay.

However, not all buyers do that, especially if it’s their first time buying a home. One in three buyers is first-time buyers aged around 33 years of age. And typically, the average second-time buyer is aged about 56. (3)

On average, if the buyer plans to take the loan from the FHA (Federal Housing Administration) it can take 54 days before the money is released.  On the other hand, if the buyer is a veteran who’ll get the funding from the VA (Department of Veteran’s Affairs), they may need to wait for about 45 days. (4) (5)

Homeowners insurance

Another cause of delay is homeowner’s insurance. While most home sales don’t require it, you and the buyer should take care of the insurance when the purchase offer is signed. It can also protect you if something happens to the property between the contract signing and closing date.

Conclusion

Those are just the things you can expect to happen before you get your money from your house’s buyer. If you add up the ballpark figures listed in this article, you can assume that it may take two to three months before you can get your money after a buyer shows interest in your property.

As you may have read, there are a lot of situations and problems that may arise before the closing date arrives—and those can greatly affect the speed of the payment. The ones mentioned here are just the most common. Of course, there are actions you can do to mitigate those potential reasons for delays. And you should start researching them.

Sell to a Real Estate Investor Cash Buyer

If time to sell is important to you. You may want to look for a local cash homebuyer or real estate investor. Typically the selling process goes much faster — you can get your money within 2 weeks time. This is because most real estate investors and homebuyers have money readily available; meaning they do not need to rely on banks for loans, and they usually waive the home inspections. Another plus is that you will be working and negotiating directly with the buyer — there are no additional commissions or fees you will need to pay. They will be paying you the agreed upon amount for your property once the contract is signed.

References:

  1. “These Stunning Stats Highlight the Importance of Home Inspections”, Source: https://windycityhome.com/2019/10/08/home-inspection-stats-research/
  2. “HOA Statistics”, Source: https://ipropertymanagement.com/research/hoa-statistics
  3. “83 Shocking Real Estate Statistics You Need To Know”, Source: https://theclose.com/real-estate-statistics/
  4. “How Long Does It Take An FHA Loan To Close? “, Source: http://www.fhahandbook.com/blog/how-long-fha-closing/
  5. “How Long Does It Take To Close A VA Loan? “, Source: https://www.veteransunited.com/realestate/how-long-does-it-take-to-close-a-va-loan/
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