What real estate investors need to know about remote closings, wiring money, title company funding?

by | Indiana real estate, Indy Anna, Real Estate Investing

What real estate investors need to know about money transfers, remote closing and wiring money.

Whether you are doing remote closings as a passive investor or not, you and your team need to know te details of how title companies handle closings and money transfers.  I just had a deal that nearly cost our investor $6,000 in B.S. fees because his attorney made a common mistake, one that would’ve been avoided if this class was available to him. 

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Now for today’s class on money transfers and remote closings…

Money transfer options for closings BigReia.com

What real estate investors need to know about wiring money, title company transfers and cash for remote closings.

Can I wire money from my bank?

Can I wire money to my contractor?

Can I Zelle earnest money to the title company?

You can download the above in a .pdf HERE.

I’ve had several questions like this come in recently that are about wiring and transferring money, and while they may not seem like much in terms of ‘gee, I wonder’s’ we need to address these now to help a lot of people out ahead of time. Many folks have become used to transferring funds between friends and family by third party apps such a Venmo, Zelle, etc. This CAN work really well in a lot of cases. So well in fact over 18 million transfers can originate in one month alone;

https://www.frbservices.org/resources/financial-services/wires/volume-value-stats/monthly-stats.html

So if these work so well, where do the questions come from?

Let me answer that for you and say ‘cash-apping’ your friend $20 is very different from transferring an amount in the thousands to a contractor for rehab work or a title company for closing. Unfortunately a lot of investors, industry professionals and end users do not understand this.

Not having a full understanding of how this works causes delays in closings, rehab work, and other significant issues.

Indy Anna explains:

Who you can Zelle money to
Who usually needs a wire transfer
Certain rules that apply to sending money with Zelle

BONUS- how to reverse an accidental wire transfer

So I got with a few folks from our People Page at:

https://www.BigReia.com/People

Here’s what they had to say would be helpful to know now;

Sending money via Zelle.

Most title companies won’t accept this and they will still require that funds be wired in or by cashier’s check apart from earnest money.

I want to also be clear on one thing here for those of us above age 20 something- a ‘personal check’ does not mean now what it meant in the 1990’s. If you’re older than 20 something you no doubt remember getting a check from grandma or Auntie at gift giving time that had ‘Precious Moments’ figures in the background, or Looney Toons etc that had been ordered off of a paper mailer inset in the newspaper.

These weren’t backed by any bank, simply the addition of a routing number was printed on it along with the name- meaning it didn’t have a bank ‘seal’.

Nowadays, a ‘personal check’ means any check that is not a cashier’s/certified check.

A personal check will not be a “certified” or cashier’s check even if it is a bank issued check.  Personal checks are still used but that is usually just for earnest money.  In general keep the schedule and timelines in mind and  in mind, do not use any leftover, non-bank sealed checks.

For anything beyond earnest money, you will almost always have to use a cashier’s check.

For end users thinking they will be able to ‘Zelle’ money to a title company, this will not work in most every single case. It’s imperative that end user clients understand they will be making a trip to the bank for a cashier’s check, and they should plan this in the checklist of ‘things to do’.

Okay so it will work to send money to a contractor  with Zelle for some rehab work- especially for those of you who are having smaller jobs, BUT there is a daily send limit of $750.00 USD.

Now, if you happen to have a business account for your LLC in place?

You can send up to $15K in one day, but please do not assume you’ll be able to Zelle all the funds for the first half of a job/materials if you’re not sending it between business accounts.

This brings us to write transfers.

Most title companies will prefer to use wire transfers as they move along faster domestically. In some international transfer cases, it can take up to a week to see funds deposited, just depending on the software the title company uses. Agents should bank this in when writing contracts to ensure good faith funds are deposited when promised.

Find out what your title company prefers and do things their way to avoid delays.

Now we have run into cases where clients have transferred funds into the wrong account via wire. Sometimes, we are able to catch those in time and this involves;
– contacting  the bank of issue (by transferring party)
– contacting the bank of request/receiving (by receiving party)
– confirming wire has been released to bank of issue (by transferring client)

If you follow this three step process, in most cases you can take a return process of up to 45 business days down to less than 5 business days total, so have the specific people actually call to reverse a situation like this much faster.

For our investors here’s what we do:
1.)  We help you set a new bank account.
2.)  We use this bank to close and then you can wire/Zelle funds into the account
3.)  Our manager has a “debit card” and they get clearance for every charge and they can start using funds for rehab, placing tenants, etc.
4.)  We get alerted for every transaction and you will get a detailed daily email directly from the bank every day
5.)  Lastly we do the process over with the next property but now we have a relationship with the bank, title company and others so it will be cheaper and faster

So in summary, we covered;

Who you can Zelle money to
Who usually needs a wire transfer
Certain rules that apply to sending money with Zelle
BONUS- how to reverse an accidental wire transfer
We also talked about our five steps in banking with remote rehab, flips and title companies

Upcoming we have the adventures of our BigREIA friends as well as our Always Free Download preview, but for now make sure to go to https://www.BigReia.com go there and you’ll…

Make the Universe Smile = )

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Thanks so much!  = )

Make the Universe Smile.

~ Indy Anna
Love (at) BigReia.com
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