So you accepted an offer on your house. Congratulations! Before you box and label all of your earthly possessions, it’s time to celebrate. Except first, you’re probably wondering about your money. This article is for you if you’re asking—
I sold my house. When do I get my money?
You’ll receive the proceeds from the sale of your house after the property closing, though in some instances it can take one or two business days for the escrow holder to cut the check or wire you the funds.
Bottom line: Once your bank receives the funds, your closing agent can then disburse the remaining money to you (as well as your realtor if applicable). So the exact answer to your question will be determined by the escrow company as well as the agreed-upon method of receipt.
When You Sell a House, Where Does the Money Go?
Ideally, in a traditional sale, you’ll be able to sell your house for more money than you owe on your current mortgage. If and when that happens, where does the money go? At closing, the buyer of your house will bring the necessary funding to cover the sale price. At that point, the money will go to the following:
- The bank. The funds will first cover any remaining amount on your current mortgage.
- Outstanding loans. The funds will then cover any additional loans (such as equity loans) if applicable.
- Real estate agent. The funds will cover any of your closing costs, commissions, or taxes. Click here to read when does a Real Estate Agent get paid their commission?.
If and when there is additional money left over, that money will go to you, the seller.
When Does Money Change Hands in Real Estate?
A third party, called an escrow, holds onto all money and documents during the sale of a house until all parties involved in the sale have fulfilled their financial obligations for the house. Once all documents are signed, escrow officially closes and then money changes hands in real estate.
Important note: In some states, you may be eligible to receive payment as early as the same day of your closing once all the steps occur. In other states—known as dry funding states—you may be required to wait up to four days between the closing and the lender’s official approval of the loan. In dry funding states, you get paid only after the lender officially approves the loan and then sends the money to the closing agent.
As of 2021, dry funding states include:
- New Mexico
Who Pays the Seller the Money After Closing?
In most states, as soon as the closing is complete, the mortgage lender can make the money available to the seller from the sale of the home. Sometimes the money is held in escrow by the lawyers then will be released on closing day, the money would already be transferred to the lawyers and held before closing day. This is done just in case a holdback is required, a holdback happens if there is an issue with the property and the buyers hold back money until the issue is fixed.
How Long Does Funding Take After Closing?
If all paperwork has been verified, the closing agent can pay the seller the money as early as the same day as closing. Sometimes this can take a day or two depending on what time of day the closing occurs. If it’s at the end of work day or late on a Friday, it isn’t uncommon for closing and funding to take a couple of days to finalize.
With that in mind, it is ideal to close on a house between Tuesdays and Thursdays.
When You Sell A House, Do You Get All the Money at Once?
When you sell a house, you do typically get all the money owed to you at one time, keeping in mind, first—
- Home loan is paid off
- Taxes or applicable HOA fees are paid
- Realtor is paid
Selling Your Home FAQs
Do you get your down payment back when you sell your house?
No, typically speaking, a buyer doesn’t directly or specifically receive the original down payment after selling the house. That said, hopefully, the price of the house is set at a good fair market value, and enough profit is made on the house to make this a non-issue.
Anything left over after closing costs as well as paying the original lender belongs to the seller, no matter how much was paid for the original down payment.
Let me quickly explain in simple terms, let’s say you purchase a house for $100,000 with 25% ($25,000) down, you now owe $75,000 to the lender (typically the bank). After a year of owning the property, and after paying numerous mortgage payments you are going to sell. You likely owe around $70,000 to the lender now, so if you sell at $100,000 you are making $30,000 right? No, not necessarily. You have selling expenses, this cuts down your profit.
Selling a house comes with expenses that range from 4% up to 10%, which means you need to sell your property for your down payment amount plus the expenses more than what you currently owe in order to make your down payment amount back.
Do I need to pay taxes when I sell my house?
There are three basic types of taxes to keep in mind when selling a house.
1. Capital gains tax
This type of tax is applied to the profit made from the sale of non-inventory assets (including real estate or property).
2. Property tax
Depending on when a person buys or sells a home, property tax may or may not factor into closing costs depending on how much the homeowner has paid during the year.
3. Real estate transfer tax
This type of tax is not universal and may be imposed by certain states or counties when transferring a property within a jurisdiction.
For more information about each of these type of taxes—and to learn which (if any) apply to the sale of your house—talk to your realtor or real estate agent.
What fees will I pay when selling my house?
On average, sellers pay between 8% and 10% of the sale price of their home for closing costs. This includes the agent commission (roughly 6% of the price of the sale) as well as various seller fees (roughly 2% to 4%). These fees vary depending on—
- Tax rate where the seller lives
- Value of the home
Buying a house can be a wonderful experience, as can selling a house when it’s time to move on to other places or opportunities. With or without prior experience selling a house, you can avoid unnecessary pitfalls by working with the right realtor or real estate agent and by continuing to read and research.
With some good luck and a little extra effort, you can sell your house at the highest possible price and in the shortest possible time and be on your way. We wish you the very best luck!