You're at the closing table, the deal is done, and everyone is ready to hand over keys — but the transaction can't actually fund until the money in escrow is "good funds." It's a phrase buyers, sellers, and even newer agents hear constantly without anyone stopping to explain it. So let's answer the question directly.
What are "good funds"?
Good funds are money that has fully and irreversibly cleared into the closing agent's escrow account, so it can be disbursed the same day without risk of being reversed. In Colorado, closing and settlement companies are generally expected to disburse from collected funds — meaning the money is genuinely available, not merely deposited and waiting to clear. A personal check may show up in an account instantly on paper but can bounce days later; good funds are the forms of payment that don't carry that risk.
The concept exists to protect everyone in the transaction. If a closing agent disbursed proceeds to a seller based on a payment that later failed, the money would already be gone. Good-funds standards close that gap by requiring payment types that are effectively guaranteed before anyone gets paid.
Which payment types qualify?
Not every form of payment is treated equally at closing. The table below is a general guide to how common payment methods are typically viewed. Requirements vary by company, dollar amount, and circumstance, so always confirm what your specific closing agent will accept before the day of closing.
| Payment type | Typically accepted as good funds? | Notes |
|---|---|---|
| Wire transfer | Yes — most preferred for larger amounts | Funds move bank-to-bank and settle quickly; generally required above certain thresholds |
| Cashier's check | Often, for smaller amounts | Acceptance and dollar limits vary by company; some have same-day availability rules |
| Certified check | Sometimes | Treated similarly to cashier's checks but policies differ |
| Personal check | Rarely for closing funds | May be accepted only for very small amounts or earnest money, at the company's discretion |
| ACH / electronic transfer | Depends | Timing and holds vary; confirm in advance |
| Cash (physical currency) | Generally no | Reporting rules and practical limits make this impractical at closing |
This is educational information, not a statement of any one company's policy. The only reliable source for what will be accepted in your transaction is the closing agent handling it.
Wire transfer vs. cashier's check: how they compare
These two are the workhorses of real estate closings. Here's how they generally stack up:
| Factor | Wire transfer | Cashier's check |
|---|---|---|
| Speed to "good funds" | Usually same day once received | May be immediate or subject to a hold, depending on policy |
| Best for | Larger closing amounts | Smaller amounts |
| Where it's obtained | Sent by your bank | Issued by your bank in person |
| Fraud consideration | Target of wire-fraud scams — verify instructions carefully | Physical document; can be lost or, rarely, counterfeited |
| Reversibility | Very difficult to recover once sent | N/A once delivered and cleared |
The wire-fraud warning every buyer should read
Real estate wire fraud is one of the most costly scams in the country. Criminals monitor email inboxes, then send convincing fake messages that appear to come from a title company, lender, or agent — instructing the buyer to wire closing funds to a fraudulent account. The money is often unrecoverable once sent.
Here is the single most important thing to understand: a title company's legitimate wiring instructions typically do not change during a transaction. If you receive an email — even one that looks exactly like prior correspondence — telling you the wiring instructions have changed, that the account is new, or that you need to send funds somewhere different at the last minute, treat it as a red flag.
Simple habits that protect you:
- Call to verify. Before sending any wire, call your closing agent using a phone number you independently confirmed — never a number from the email itself.
- Be suspicious of any "change." Last-minute changes to wiring instructions are a classic fraud signal.
- Verify receipt. After sending, call to confirm the funds arrived in the correct account.
- Slow down under pressure. Urgency and secrecy are tactics scammers rely on.
None of this is meant to alarm you — the vast majority of closings fund smoothly. A few minutes of verification simply removes the one risk that's hardest to undo.
Why closing agents care so much about this
When a closing agent disburses funds, they're relying on the money in escrow being real and final. Good-funds standards exist so that sellers get paid, payoffs are made, and agents receive commissions without anyone advancing money that might later evaporate. Understanding the concept helps buyers plan ahead — knowing to arrange a wire or cashier's check in advance rather than scrambling on closing day.
Frequently asked questions
Why can't I just write a personal check at closing?
Personal checks can take days to clear and can be returned for insufficient funds even after they appear deposited. Because closing agents typically disburse the same day, they generally need payment that is already guaranteed. Some companies may accept a personal check for very small amounts, but you should never assume this without confirming first.
Is a wire transfer or a cashier's check better?
It depends on the amount and the closing agent's policy. Wires are commonly preferred — and often required — for larger sums because they settle quickly and bank-to-bank. Cashier's checks are frequently fine for smaller amounts. Ask your closing agent what they require for your specific transaction.
What should I do if I get an email saying the wiring instructions changed?
Be very cautious. Legitimate wiring instructions from a title company typically don't change mid-transaction. Do not act on the email. Instead, call your closing agent directly at a phone number you've independently verified — not one provided in the suspicious message — and confirm before sending anything.
How quickly does a wire become "good funds"?
In most cases a domestic wire is available the same day it's received, which is a big part of why wires are preferred. Timing can still depend on when the wire is initiated and each bank's cutoff times, so send earlier in the day when possible.
Does "good funds" mean the same thing in every state?
The general idea — that closing money must be genuinely collected before disbursement — is common nationwide, but the specific rules and accepted payment types vary by state and by company. This article describes the concept generally; your closing agent can tell you exactly what applies to your transaction.
This article is general educational information about how real estate closings commonly work and is not legal, financial, or transactional advice. Payment requirements vary by company, amount, and circumstance. Always confirm accepted payment methods and verify any wiring instructions directly with the closing agent handling your transaction.