There are two main ways to transfer funds at the closing of a real estate transaction: You can close using either a certified check or wire transfer. But which one is best?
There’s a debate brewing about wire transfers vs. cashier’s checks, and both sides have strong arguments. To help you make the best decision for your unique situation, here’s a rundown of the pros and cons of wire transfers vs. cashier’s checks.
Cashier’s Check vs. Wire Transfer: What’s the Difference?
A certified check is different from what you’ll find in your checkbook. A certified check is certified by an officer at the bank, first to be sure the funds are available at the time of writing, and second, to ensure the signature is legitimate.
A cashier’s check takes it one step further by placing the funds into an escrow account until deposited or rescinded. This makes a cashier’s check about as close to cash as you can get.
A wire transfer is when funds are directly transferred from one party to another, perhaps from bank to bank or from bank to title company to bank. A wire transfer is as immediate as it gets, and there’s no check involved.
The Pros and Cons of a Certified or Cashier’s Check
The benefit of a check is that it’s typically cheaper than paying fees related to wire transfers. You can also reverse a check more easily than you can a wire transfer, although most title companies require five to ten days for a cashier’s check to clear to prevent the remitter from reversing the check.
The cons of checks are numerous. You can always lose a check, which is bad news when the funds are in escrow. Also, checks are easier to forge than a wire transfer, as there’s little paperwork with a wire transfer. Finally, checks make it impossible to do a virtual closing. You have to be there to hand it over in person. Most title companies require wire transfers, so cashier’s checks may not be an option for your payment.
The Pros and Cons of a Wire Transfer
Wire transfers are great for overseas and virtual closings where you’re not actually face to face. They are very safe overall, and they serve as a great way to send money securely.
The main drawback of wire transfers is that they can also come with fees from the banks sending and receiving, but given the convenience and safety they offer – it can more than make up for the fees charged.
Which Is Right for You?
At Title Partners of South Florida, we’ve used both wire transfers and cashier’s checks in the past, but like most title companies, we now require wire transfers for all of our real estate closings. They have proven to be the most reliable and safest choice for transferring money at closing. The only time we accept a cashier’s check is if the cash to close is under $500 or if it’s for the earnest money deposit. However, for these 2 items we will in many cases accept a personal check, which doesn’t carry the fee that the bank charges for a cashier’s check.
If you have more questions about cashier’s checks vs. wire transfers, Title Partners of South Florida has the answers. Get in touch with us today to learn more about your options or visit our site for a free title insurance quote!