Author Topic: Best way to receive payment from escrow?  (Read 315 times)

jeromedawg

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Best way to receive payment from escrow?
« on: August 25, 2020, 05:44:35 PM »
Hey all,

Just curious but do most of you just have the money wired? Or do you prefer to get a check for the proceeds and take to your bank to deposit?

waltworks

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Re: Best way to receive payment from escrow?
« Reply #1 on: August 26, 2020, 11:57:24 AM »
Unless it is so large an amount that you can't e-deposit it, I'd just take the check, there's usually a fee ($25-50) for the wire option.

-W

Aunt Petunia

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Re: Best way to receive payment from escrow?
« Reply #2 on: August 26, 2020, 12:25:38 PM »
I wasn't given a choice, Wells Fargo just sent a check for the escrow refund and overpayment. The timeframe was surprisingly reasonable, but that was before the post office was having issues. I don't know why they can't just ACH it.

jeromedawg

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Re: Best way to receive payment from escrow?
« Reply #3 on: August 26, 2020, 04:07:36 PM »
Unless it is so large an amount that you can't e-deposit it, I'd just take the check, there's usually a fee ($25-50) for the wire option.

-W

Yea, the wire fee is $30.

We have everything in the name of a trust so going to go to the bank to setup a trust account so we don't run into issues depositing. Is there any reason to pay the $30 fee other than convenience and faster access to funds? We are at some point planning to look for a new property but the likelihood of something coming up within the next few weeks is pretty low in my estimation. I think we were wanting to wait it out a bit more to see where home prices end up.

They said it could take 7-14 days, otherwise, for the check to clear. Any risks or considerations for depositing such a large sum ($500k+) via check ?

secondcor521

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Re: Best way to receive payment from escrow?
« Reply #4 on: August 26, 2020, 05:28:51 PM »
Unless it is so large an amount that you can't e-deposit it, I'd just take the check, there's usually a fee ($25-50) for the wire option.

-W

Yea, the wire fee is $30.

We have everything in the name of a trust so going to go to the bank to setup a trust account so we don't run into issues depositing. Is there any reason to pay the $30 fee other than convenience and faster access to funds? We are at some point planning to look for a new property but the likelihood of something coming up within the next few weeks is pretty low in my estimation. I think we were wanting to wait it out a bit more to see where home prices end up.

They said it could take 7-14 days, otherwise, for the check to clear. Any risks or considerations for depositing such a large sum ($500k+) via check ?

I personally would only pay the wire fee if the interest I could earn from getting the money earlier would be much more than the fee.  I say "much more" because I have heard many more bad stories about wire transfer issues than I have about ACH/EFT issues or check issues.

I personally wouldn't hold $500K in a single FDIC bank account, since the insurance limit is $250K.  There are ways to structure it to get more insurance if you like, or just spread the amount across multiple banks.

If you plan to move the money from the bank account where you deposit it (like to Vanguard or something) and you're in a hurry to do so, then talk to the bank manager and ask them if they will reduce the hold time so you can move the money sooner.  If you're a longtime and good bank customer, they probably will.

jeromedawg

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Re: Best way to receive payment from escrow?
« Reply #5 on: August 27, 2020, 10:35:48 AM »
Unless it is so large an amount that you can't e-deposit it, I'd just take the check, there's usually a fee ($25-50) for the wire option.

-W

Yea, the wire fee is $30.

We have everything in the name of a trust so going to go to the bank to setup a trust account so we don't run into issues depositing. Is there any reason to pay the $30 fee other than convenience and faster access to funds? We are at some point planning to look for a new property but the likelihood of something coming up within the next few weeks is pretty low in my estimation. I think we were wanting to wait it out a bit more to see where home prices end up.

They said it could take 7-14 days, otherwise, for the check to clear. Any risks or considerations for depositing such a large sum ($500k+) via check ?

I personally would only pay the wire fee if the interest I could earn from getting the money earlier would be much more than the fee.  I say "much more" because I have heard many more bad stories about wire transfer issues than I have about ACH/EFT issues or check issues.

I personally wouldn't hold $500K in a single FDIC bank account, since the insurance limit is $250K.  There are ways to structure it to get more insurance if you like, or just spread the amount across multiple banks.

If you plan to move the money from the bank account where you deposit it (like to Vanguard or something) and you're in a hurry to do so, then talk to the bank manager and ask them if they will reduce the hold time so you can move the money sooner.  If you're a longtime and good bank customer, they probably will.

Thanks for the note on the FDIC limits. We have the property in the name of our trust so opened a trust savings/checkings at my bank and I asked the banker about this - he said that for the trust, per successor, it's a $250k each, so we could leave $500k in that account and then transfer $100k or whatever to the non-trust savings or checkings and we should be good.

BTW: do those FDIC limits also apply to taxable investment accounts too where the money is currently invested in funds, etc?

We plan to, for now, keep most if not all of that money in the bank account. I may transfer some over to our investment account and increase our investments as well. Haven't quite thought through all of that just yet. We are intending to buy a home and that could happen within the next year so we'll see.

secondcor521

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Re: Best way to receive payment from escrow?
« Reply #6 on: August 27, 2020, 01:26:48 PM »
FDIC insurance is for banks.  NCUA is a similar type of insurance for credit unions.  For taxable investment accounts, there is SIPC insurance, and I just found out that it also has a limit of $250K per account for cash, but I'm not sure what exactly qualifies as cash, since many people put their "cash" into money market funds, which are technically an investment.

If you want to be super careful, you'd want to check with the FDIC, NCUA, or SIPC to make sure that whomever is holding your money is a member in good standing, but personally I don't worry about it if I'm dealing with a big, reputable company like JPMorganChase, or Vanguard, or someone like that.

Also, I note that the SIPC insurance is only $500K per account total.  But it's actually in effect more than that, because that is the amount of losses they will cover if they can't actually recover assets in the event of a loss.  I think most big firms have supplemental insurance of some kind to cover larger accounts, but offhand I'm fuzzy on the details.  See here for some info:  https://www.fool.com/the-ascent/buying-stocks/articles/brokerage-account-insurance-is-your-account-safe/
« Last Edit: August 27, 2020, 01:31:07 PM by secondcor521 »