Closing (home purchase) question

[Safire]

I am on the verge of closing on a home in California. We are putting up a large (to us) downpayment and I have some questions about the closing process.

I've reviewed the closing disclosures and I'm happy with the rate etc. The downpayment comes from multiple sources (bank accounts and stock account and a gift from my brother). My question is not tax related but about fund availability.

My brother *insisted* on paying by a personal check. The check cleared yesterday and the amount was credited to our joint Wells Fargo bank account (from where the funds will be wired out to closing). I also had the stock account liquidated and the money sent to the same joint bank account. However, I was told by a bank employee when I went in to enquire that there *are* some times (huh?!) where there may be a hold on an account and the funds will not be made available for withdrawal. This worries me because the employee was vague - she said that she's "seen it happening" in a few cases.

Our closing is on August 9, 2024 and all but the last few thousands of the downpayment have landed into this bank account. Has anyone ever heard of this supposed "hold on funds" even if the check / ACH transfer has cleared? My brother confirms that the funds have left his bank account and my Schwab stock account also shows that the funds have left my Schwab account for my bank account. So what sort of hold is this woman referring to? I wanted the funds there by today (July 30) - a good 10 days ahead of closing and now she says this.

She also claimed that I should wire the funds to the escrow company no later than Aug 2, a whole week ahead of Aug 9, saying that wires may take upto 3 days to be credited to the escrow company and that the weekend does not count, so if I wired the funds out on Aug 2 then the funds could reach the escrow company by Tuesday, August 5, 2024 (3 business days from August 2).

I hate hate hate being this negative but I do fear that if something happens and we decide to forfeit our deposit and walk away, then that large downpayment would be with the escrow company leaving us at their mercy. Since this is our first home, the anxiety and uncertainty are plaguing me.

Do you have any advice?

If we do decide not to close, would we forfeit the entire downpayment as opposed to just the earnest money?

Also, what is your opinion about this alleged holds on funds that can "sometimes occur"??

Finally, should I really wire out the funds on August 2 for an August 9 closing date? Help!

 

[mrfeh]

I'd contact somebody higher up the chain at WF to get confirmation the funds are available. I can understand a hold of a few days, but not the length the employee told you.

I also don't see the need to wire funds a week in advance, but I've only paid for a house via wire once, which was initiated 1 or 2 days before the closing. This is also something to ask of somebody higher up at WF.

 

[jfn111]

California customs might be different but most closings here in MN involve cashiers checks. I have had plenty of clients pickup their downpayment checks the morning of closing.

 

[retire48in2018]

this might be a WF issue? I have bought and sold quite a few homes. At most, I wire funds a couple hours before scheduled closing. Sometimes, I give cashiers check at scheduled closing time.

Never more than a few hours. If closing is first scheduled appointment in morning - I might wire at close of business prior day.

In my experiences, having $ too early at escrow agency is not an advantage- they are working closing by closing / not “looking ahead”

 

[38Chevy454]

I agree with others, the information from the employee seems incorrect. The only thing I can see is a hold on the personal check funds, for maybe 1 week from date of deposit. That should be no problem with your schedule. Also concur that wiring 2 days before closing should be sufficient. Ask title company or whoever's doing the closing for their recommendation. Talk to a more knowledgable personat WF. Question and understand any hold time limits, as well as wiring delays.

 

[sengsational]

I know this is a big deal for you, a rare big purchase, but I think a chill pill is in order. The seller and you have a deal you both like, so even a delay in funding isn't necessary going to crater the deal. But there will probably be no delay anyway. Rather than do the wire early, I'd just go to a branch and get someone to assure me that all the funds were available for withdrawal. Even if the funds aren't available on closing day, you'd certainly not have money beyond your earnest money at risk. If the seller feels they're getting yanked around and has lost confidence in your ability to close the deal, I suppose they could walk, but I don't see that as a likely scenario.

 

[Aerides]

Ask someone at your bank who knows, and don't take "i don't know" for an answer. Yes, it's normal for particularly large checks to have staged availability at some banks, particularly credit unions. But 10 days out would be highly unusual.

Do you have a realtor or real estate attorney handling all this for you? That was recommended a few times in your earlier threads.

 

[cathy63]

Login to your Wells Fargo account and click on your account name. Right near the top of the page you should see:
Posted Balance
End of Day Balance
Available Balance

Available balance is the amount that you can spend right now. If that amount is bigger than the amount you want to wire to escrow, everything is fine and you can stop worrying.

If there's a difference between Posted balance and Available balance, then some of your money is on hold. If any of the held funds are from Schwab, you can talk to the bank manager and ask for that money to be released. There's not much you can do to free up funds that were transferred by personal check, but the bank manager (not the random employee you talked to before) can at least tell you how long the hold will be.

Do you have a realtor or real estate attorney handling all this for you? That was recommended a few times in your earlier threads.

Yes, this is exactly the reason that you need to have a buyer's agent. Talk to them. You're paying them (or the seller is paying them) to answer these questions for you and make sure the closing goes smoothly. They know everything about how this works.

If you don't have an agent looking after your own interests, then talk to the escrow agent. They receive and send millions of dollars by wire every day. They have definitely done business with Wells Fargo before and can tell you how long a wire will take.

 

[euro]

I agree with others that you will very lkely be ok. However, have you checked with your lender as to what their seasoning requirements re for your downpayment? Lenders are often leery of money arriving last minute from "friends and relatives" and they may require you to submit a letter from your brother certifying that this is a gift and not a loan (they don't want additional loans complicating their lender position). They do want to know where all the downpayment money came from (i.e. sale of your stock, etc) or want confirmation of gifts. If you had received those funds from your brother 3 months ago, then the money would be "seasoned" and lender wouldn't care. They are just leery of last minute transactions. You may be ok, but this type of thing can easily blow up the entire deal on the day of closing.

 

[Safire]

Yes, I do have a real estate agent representing me. He's not been of much use, honestly, because this is a brand new construction with a builder who wouldn't budge on most things. He (agent) also said he cannot help me with a Wells Fargo question. My brother's check is a new check and the bank / lender has cause for concern but the bigger issue is the whole "hey, so we may hold funds blah blah blah".

I wish he had just wired the funds directly to the escrow company instead of giving me a personal check but he wouldn't budge on that, either and I didn't want to press the issue ... gift horse's mouth and all that.

I personally would have preferred to pay the downpayent via a large cashier's check. Do cashier's checks (esp north of 200K) have holds ? I've never had such a big transaction before and my anxiety is taking over as we reach the finish line.

 

[DJRR]

In VA the title company for the builder sent me a closing statement the night before and I picked up a cashiers check at the bank in the morning and brought it to closing. Title company will take a personal check for any last minute changes. I doubt your builder has a solid closing statement a week early. There are usually last minute tax changes, etc. that happen late. My experience has been 90% the week before, 99% the night before, and 100% the day off but YMMV. Volume is certainly lighter now.

Not to cause more anxiety but triple check that the wire instructions are actually from the closing agent of the builder. I would personally call a known employee and verify everything. A devastating scam has been customers getting false wire instructions prior to their closing and sending the wire to a false account never to be seen again with no recourse because they authorized it.

 

[cathy63]

I personally would have preferred to pay the downpayent via a large cashier's check. Do cashier's checks (esp north of 200K) have holds ? I've never had such a big transaction before and my anxiety is taking over as we reach the finish line.

Yes, funds from a cashier's check can be held. The bank where the check is deposited doesn't receive the money instantly, so they can put a hold on the funds until they check is processed and confirmed by the issuing bank. For this reason, if you want to pay by cashier's check, the escrow agent may ask you to deliver it a day or two before closing. You'd have to discuss it with them if you want to do something other than what you already told them when you started this purchase process.

A wire transfer is a perfectly normal way to buy a house in California. You'll probably find the wire instructions in the package of escrow instructions you signed. If not, call the escrow agent and ask them to email the instructions to you.

 

[MC Rider]

Sounds like you should be fine. But if worried you can pick up the phone, hold as long as needed, and get someone to answer your question, someone you can give what for! to if needed. Good luck.

 

[RetiredHappy]

If you don't have a good relationship with your bank, large money that is deposited via a check may be held for several days. It is to prevent fraudulent checks from being cashed out before they are caught. Good relationship is defined by having a ton of money with the bank say through funds being managed etc. So trust becomes an issue. I would expect the money to be released from hold after about a week. You can then wire in the money the day before closing. Even if it is delayed by a day or two, there should be no issue with closing. It has been known to happen.

 

[SecondCor521]

Your local bank branch manager should be able to precisely and exactly tell you what holds may be on any funds at your bank and precisely and exactly when they will be released.

I've always either wired funds day of closing (more recently) or brought a cashier's check day of closing (earlier purchases) and never had a problem. But as others have mentioned, you can check with your closing/title/escrow folks and they can help you even if your realtor refuses to do so.

 

[pb4uski]

In our recent home purchase I wired the funds to the closing agent in the morning of the day prior to closing.

 

[troutnut1]

My experience in California is very dated but I was a broker there for a long time. Your purchase contract probably had a clause in it dealing with damages. The choice used to be that the parties agree up from that the deposit amount would be the "liquidated damages" amount and ONLY the deposit would be forfeited, OR the parties don't agree to 'liquidated damages" in that deposit amount, in which case either party could sue for actual damages instead of just settling for the deposit. Conceivably, damages could be more than just the deposit. Kind of a double edged sword.

Escrow companies, back then at least, had to have an agreement from both parties before they turned over money to anyone. Hence "escrow instructions". Consequently, in the absence of an agreement by everyone, the return of your money could be delayed and held up in escrow pending agreement, or a court decision.

 

[folly]

This is what happens when banks got rid of all the educated employees who made a reasonable salary and replaced them with the lowest wage they could get away with! That started 15+ years back. I asked the bank manager one day about this and he spouted off "everything they need is on the computer". It worries me! I had a bank teller try to tell me there was a hold on a cashier check. I was closing on a house within a day or two. I began to educate her on what a cashier check was. She became very defensive, finally her very nervous older co-worker got her attention and told her I was right. Your on your own these days. Nobody knows. For all you who wrote software in your working days, you know what I mean, once there was "an app for that", people forget the business process!

 

[RetiredHappy]

This is what happens when banks got rid of all the educated employees who made a reasonable salary and replaced them with the lowest wage they could get away with! That started 15+ years back. I asked the bank manager one day about this and he spouted off "everything they need is on the computer". It worries me! I had a bank teller try to tell me there was a hold on a cashier check. I was closing on a house within a day or two. I began to educate her on what a cashier check was. She became very defensive, finally her very nervous older co-worker got her attention and told her I was right. Your on your own these days. Nobody knows. For all you who wrote software in your working days, you know what I mean, once there was "an app for that", people forget the business process!

There is a well known cashier's check forgery which is more common than you realize. Hence, banks would still put a hold on cashier's check.

 

[SecondCor521]

There is a well known cashier's check forgery which is more common than you realize. Hence, banks would still put a hold on cashier's check.

I've heard of those scams.

Putting a hold on a cashier's check that is deposited into a separate bank makes sense. There shouldn't be any hold on the cashier's check if deposited at or presented to the bank on which the cashier's check was drawn. In fact you used to be able to go into the bank on which a cashier's check was drawn and get cash then and there.

Nowadays, if a bank can't tell if one of their own cashier's checks is a forgery or not, I'm not sure what to think about that. Makes me wonder about the bank a bit.

 

[copyright1997reloaded]

I'm late to the party here but this is why I typically don't deal with banks when a lot of money is involved. I recently purchased a new place and wired "quite a few" hundreds of thousands of dollars from Schwab. It was there (in the target account) in minutes. ONE of the reasons I did it this way was because even if there was a question on funds availability of some of the $ I sent to Schwab, I could still do the wire (as I have margin buying power there).

I did do the wire a day before the closing (instead of the day of the closing) "just because" (ya never know when there is a glich), but again it was only minutes and the escrow/closing law firm had the funds.

 

[mailbagman]

I agree with others, the information from the employee seems incorrect. The only thing I can see is a hold on the personal check funds, for maybe 1 week from date of deposit. That should be no problem with your schedule. Also concur that wiring 2 days before closing should be sufficient. Ask title company or whoever's doing the closing for their recommendation. Talk to a more knowledgable personat WF. Question and understand any hold time limits, as well as wiring delays.

My wife's credit union held a check I placed in her account ($7500) for 3 weeks, even though it came out of my account the next day from a different credit union.