What are dry/wet closings??

[Cecelia A]

Hi,

I've heard a lot about "dry closings" and "wet closings", but what exactly are they??

Thanks!

[Will Barnard]

A wet closing refers to a deal that is funded with your own funds (or that of your own borrowed funds) to close a transaction.

A dry closing refers to a deal where you use an end buyer's funds to close your transaction, then the second transaction closes.

Example:
A=Your seller (usually a bank short sale or REO)
B=You
C=Your end buyer

First the A-B transaction must close, then the B-C
In a wet funding, you bring the cash to close the A-B, then you close the B-C.
In a dry closing (also called a simultaneous closing), you would use the C buyers funds to close the A-B transaction, then the B-C closes on very same day.

Dry closings are harder and harder to complete these days as most title companies no longer allow them and new rules/guidelines from banks also prohibit them.