A Guide to Wire Transfer Best Practices
In the world of real estate, the distribution of funds is one of the last stages in the process before a buyer takes ownership of a property. Wire transfers allow this to happen, so money can move quickly and securely when people aren’t in the same location or there is a large amount of money involved.
This guide can help you learn more about the process involved with wire transfers and how to avoid fraud.
What is Wire Transfer?
A wire transfer is a specific type of electronic funds transfer, where two parties can exchange money without using cash. Money transfers electronically through banks or transfer agencies using a network like SWIFT or Fedwire. The institutions share information about the recipient, the bank account number, and the amount transferred.
Wire transfers can be sent domestically, between two people or institutions in the same country, or internationally. There are typically fees associated with these transactions, and they can take one to three business days or sometimes longer to complete.
Who Can Send a Wire Transfer?
Almost anyone with a bank account can initiate wire transfers, although some banks require you to be a customer for a given time period before you can do them.
How Do You Send a Wire Transfer?
No physical money is transferred between financial institutions when conducting a wire transfer. Instead, information is passed between banking institutions about the recipient, the bank receiving account number, and the amount transferred.
The sender first pays for the transaction upfront at their bank. The sending bank issues a message to the recipient’s bank with payment instructions. The recipient’s bank receives all the necessary information from the initiating bank and deposits its own reserve funds into the correct account.
5 Best Practices to Avoid Wire Transfer Fraud
Be aware of email scams and make sure all parties involved know the dos and don’ts.
Use a two-step process where you verbally confirm the transaction.
Don’t Email Wiring Instructions
Instead of email, use regular mail, phone, or fax wiring instruction instead.
If Wiring Instructions Suddenly Change
Be aware that wiring instructions rarely change and should only come from your closing agent.
Use Encrypted Email
Use encrypted email to avoid cybercriminals accessing sensitive financial information.
If You Suspect Fraud
Immediately notify the financial institutions and title company involved in the transaction. Also, contact local law enforcement authorities, and file a complaint with the FBI’s Internet Crime Complaint Center.
Mattingly Ford Real Estate Closing Services
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