The sellers of your dream house have just accepted your offer, and it’s time to transfer your deposit into the escrow account. The escrow officer sends you secure wiring instructions and you decide to log in to your bank account and process the deposit transfer from the Web site.
There are a few things you should know before you transfer your deposit. Here are a few tips that all buyers should know before they pull the trigger and send that hefty sum of money:
Call the escrow officer and verify the wiring instructions. Fraud is rampant when it comes to real estate-related money. The first order of business is to call your escrow officer; verify the phone number beforehand, don’t automatically call the number listed in the wiring instruction email. Confirm the escrow account details, such as the bank, routing, account and escrow numbers before you initiate the wire.
Wire your deposit. You will want to select a same-day wire transfer to the escrow account. There is a fee for this ($30-$40 per wire). Take note that banks have a cut-off time for the bank to send the money (for example, midday). Write down your Federal Reference number which is provided for a wire transfer and will be useful if you need to track the funds.
Do not send funds through an ACH payment. Title companies don’t accept Automated Clearing House (ACH) payments. The proliferation of fintech payment companies partnering with banks means that ACH transfers are often an option online (most commonly used to, for example, pay bills). But ACH is not for real estate purchase deposits. If you accidentally select an ACH option—easy to do, because it’s not always clear on a bank Web site—there will be a big delay. The money will reach the title company in a few days (vs. same or next day with a wire transfer) and the title company will reject the payment, sending it back to its original account. This process of sending and returning can take up to a week. In the meantime, your deposit was due in escrow within one- to two business days, and this significant delay could jeopardize your purchase. A tipoff that you’re mistakenly going the ACH route is if the bank site is not charging a fee, and the money isn’t going out until the next day or later.
Initiate the wire on the phone or at a branch office. This is the ideal way to wire the deposit and ensure that you’re doing it correctly. Don’t be afraid to go old school.