Moving to NC? It might be time to move your bank, too.
Perspective is so important with everything, as it helps us all understand how the whole picture works. We'd love to work with you guys if you haven't worked with us yet. So today we're here to talk about local banks and national brand banks. Local banks are banks that are in the western North Carolina area. You can get to your bank within 30, 40, 45 minutes to an hour- that’s a local bank. National brands are Wells Fargo, Bank of America; those big banks that have a national presence that are also located around here.
Why is this important? Why are we going to talk about this today? “I love my branch. I love South Dakota Credit Union” says a client. If there is a South Dakota credit union, by the way, you're probably great…disclaimer. I don't know who you are. We’re using it as an example. If you're using a regional bank somewhere else in the United States and you're moving to western North Carolina, change banks.
I'm sorry. Keep the bank but open a new account if you want. Realtors- One of the first things you should be talking with your clients about is Where do you bank? They need to move a significant sum of money into a bank that is in western North Carolina immediately. Why is this important? Before I go to that and talk about why it's important, I'm going to say it again: Realtors, buyer's agents, when you sign up a client, when they sign your buyer's agency agreement and you make sure they get funding, loan approval letter and all that, as them where do you bank? If it is not a bank in western North Carolina, have them open an account today, the next day, whatever, and move a significant amount of money to that bank account. There are no exceptions to this, but if you have some, please put them in the comments. But otherwise, I don't know of any exceptions to this.
Here's what's happening. We get to closing and they need to wire ten grand, 20 grand, 100 grand, whatever it is, and they're going to go to wire that, and Bob's Credit Union in Washington State or New York is going to say, oh, you must come in to wire funds. You must come in and sign things. Well, no one ever told us that in advance, and I guarantee you, when they say no one ever told us that, they're either going to be looking at you realtors or me as if that's somehow our duty. Well, guess what? Maybe it should be because it's causing a lot of problems with closings. Okay? Maybe something that we can help offer our clients is manage expectations of, listen, you're going to need to be able to wire your purchase proceeds for closing…are you going to be able to do that? If Bob's Credit Union in New York says we can do that by phone, millions of dollars, no problem. You're good to go. You don't have to worry about that.
I can tell you that would be the exception to the rule. Typically, what we see is the day of closing or the day before or whenever we have final numbers a week before, even, people are going to try to wire funds. They're like, “oh, you must come in.” Well, I don't want to drive to New York or fly to New York to wire my funds, but I also don't want to delay my closing. Hey, Zeno, can you just take a check? I'm not taking a check. So, let's go ahead and nip that in the bud. As you guys know, or at least maybe you'll learn here, certified checks used to be the same as cash. They take the money out of your account when you get it. So, it seems like it's the same as cash, right? They're not anymore. Call your bank, verify this with them. When you deposit a certified check into your account, they don't clear it right away. It can still be canceled. And anything that can still be canceled after we deposit into a trust account is not cleared funds. It's not good funds under the Good Funds Settlement Act, meaning that if I rely on 10,000 to be in my account, my trust account, and I close, you could still take that money back out. Now I've over drafted my trust account. I've disbursed, I've misappropriated funds. We didn't have all the money for the transaction. The seller has technically had $10,000 of my other client’s money. I'm not going to do that. I could get disbarred for that. So, you're going to wire me funds or you're going to give me a check so early as such that it has time to clear. And when we're talking about purchase funds for closing, we're talking about weeks for it to clear. So, getting me a check instead of a wire is not going to work. You're going to delay your closing by a week. There are probably attorneys out there that will take checks if it's a very small amount to fix a little bit of a discrepancy. I'm not going to make you go wire that. I mean, like less than $1,000. Because again, if it's taken out or bounced or something, I must cover it.
Realtors I don't want to hear it about, well, Zeno, just take a check. Here's what I'm going to reply to you and here's what you're not going to do. Because I've been here. I've done this, okay? The realtor- if you're comfortable taking a check, if you think they're good for it, let them write you a check and you wire me the money. That has happened zero times when they bring it up because they don't want to rely on that either. If they're not going to allow it, they really can't expect me to rely on it. Right. That's fair. So, we must have wired funds. If COVID has made anything very well known to us all, there are extra hoops we must jump through for everything in life right now. Some banks were requiring you to make an appointment to go wire. I think that's going away, but it might be coming back soon depending on federal, state, and local laws. You need to be ready to jump through those hoops.
One of those big hoops that you can just remove from the equation is your bank not being here. It's an easy thing to remove from the equation, in my opinion. It's a good idea to have a local bank where you're going to be living anyway. It doesn't have to be your only bank. You can keep the other bank, but you need to have a local bank so that when closing happens, you can walk, talk to Bob, see him face to face and say, bob, I need you to wire funds today in this amount. Can we, do it? And Bob's going to make it happen because I don't know of a bank that you can't walk in and wire. I will also say this. Tell your clients about this. There is a bank - I am not going to name names and get myself in trouble. - that is very popular in the area that is telling people that it will take two or three days for them to process a wire transfer. That is news to us. As of about two or three weeks ago, it has affected about three or four of our closings, which means it's affecting closings all over this state. They're big enough to cause that kind of problem, but small enough to be mostly North Carolina. You guys can read between the lines. Probably figure that out. If you have a question about whether your bank is this bank, reach out. We're happy to confirm that for you. And if this bank is your bank, you want to wire us funds a week before closing, even if it's an estimated amount, because they take three to four days to process wires.
Wire transfers, by definition, are one day. They go out and go in same day. That's the way a wire works, which means they’re taking three or four days to start the wire. I've had clients push back on them, tell them it's for a real estate closing. Talk about how they're going to move all their money out, leave, that kind of stuff. I can just tell you that is stress. You don't want your client to have the day of closing. But I've had to tell some clients to try that, and they have been successful somewhat getting that money wired to us faster. Why not avoid that, right? Talk to them about their bank. They don't have to leave this bank, but they need to be aware that they need to wire their funds a week before. And if this becomes a bigger, more widespread problem, I'll, of course, talk about it again.
Most folks are available to go to their bank on the same day as closing if they need to. We've even had folks, if they have a 09:00 closing, they'll come sign, then run to their bank to wire the funds over. We have it in another hour. It's usually not a big deal, but it's becoming a big deal with one of the very popular banks in the area. But again, at least they had a local bank. At least they had someone they could go to and get this fixed. So even in that instance, if that bank had been in Washington state, that might have been a lot harder to do. If they are serious about buying in western North Carolina, they need to have a local bank here, and they need to move a significant amount of money, whatever their down payment might be, into that account right away so that it gets nice and cleared, so that you can wire it at closing.
My name is Zeno Lancaster. We'd love to work with you.
No Legal Advice Intended: This post includes information about current, past, and future potential legal issues and legal developments for educational purposes only. Such information is provided for informational purposes only and may not reflect the most recent legal developments. Posted information is not intended, and should not be taken, as legal advice for a particular set of circumstances you may be experiencing. You should contact an attorney for advice on specific legal problems.
This post is a transcription of a live video posted by Zeno Lancaster in our Real Estate Facebook Group. For that reason, some parts may be edited for brevity.