Financing a Private Party Transaction

[zj96sc]

So, I'm in the final stages of trying to close a purchase. My funding is delivered, my flight is booked my hotels are booked, and yet here I am on the cusp of having it all fall apart at my feet. The problem lies in fund verification for the seller.

I financed part of my purchase. These funds came to me in the form of a cashier's check (payable to the seller) from a bank that does not have brick and mortar locations, but the accounts are handled by a bank that does (Bank A, Bank B, respectively). Regardless, the local bank won't do a check exchange or cash the check unless the recipient (seller) also carries an account with that bank, which he does not.

As a result of this, there is literally no way to complete a financed private party transaction in a keys+title-exchanged-for-money fashion.

The options we're left with are that the seller hands over his keys and title to me, and hopes my funds turn out to be valid after the 5-7-20 day period for a cashier's check to clear (obviously not smart for him), or I leave in the car without a signed title which isn't legal in the seller's state (need signed title to get transit tags to legally drive car without tags) or my home state.

So how is this done? This means literally the only way to buy a car private party is to carry cash around. Funds cannot be verified on the spot any other way. What an absurd place the world has become.

[Marcus-SanDiego]

So the seller does not have an account at bank B? But if he did, bank B would allow the seller to verify funds and cash it? If so, have your seller open an account with bank B.

I've been banking with the same bank for about 13 years, so I have no idea if you have to be a customer for x amount of time before they would allow that transaction. But it's worth looking into.

[zj96sc]

My understanding:

cash it? no
receive a cashier's check from that chase bank to him (check exchange)? yes

either way that chase will "verify" the validity of the funds by calling the issuing bank and verifying amounts against account #s, but this still is ultimately subject to the waiting period for the funds to clear if he deposits them anywhere.

how do other people do this? local banks or checks from banks with local branches?

[Marcus-SanDiego]

Here's how I did it.

I live in San Diego. I was buying a car in Denver.

Wife walked into a Chase branch in Denver. Got a cashier's check for the purchase price (my wife walked into the branch while the seller and I talked outside).

We then drove over (in seller's car) to his bank (Wells Fargo). Seller walked into his bank, had Wells Fargo verify funds, and then deposited cashier's check into his account.

We then drove back to seller's house. Signed title. Got keys. Done deal.

[zj96sc]

Ah, so, in this situation, your seller was still technically completely at risk for a handful of business days until Wells Fargo actually got that money from Chase. This is the fundamental problem. There is still a period of time that the funds could be called back or cancelled. Your seller was willing to take this leap based on Wells' "verification" of the funds, mine is not. You got lucky!

I could argue that if a bank has independently verified these funds from another bank that you could probably take their word for it, but it is not my place to force the seller to accept this.

[Mtnman]

So the local chase bank cant verify the funds of their own checks?

Could the seller sign the check to you and you cash it at your own bank, where you hold accounts if you are both present?.....and therefore you are the one that has the liability?

[zj96sc]

Bank B can verify that the funds are legitimate no problem. That still doesn't change the fact that when my seller takes that check and deposits it in his bank, the funds aren't really there for another couple days, after which I am long gone with his car and title. This is his concern.

I do not believe that he could sign the check over to me. I am not a Bank B account holder either, I have a Bank A account, and there is no b&m for Bank A. I guess that's part of the complexity.

[Marcus-SanDiego]

In the end, I would have withdrawn all of it in cash if necessary (and handed him two stacks of high society). I had a very honest seller. I was golden with this seller. Likewise, I suspect he felt the same way about me. That may not be the case for you, though.

But, yes, the cashier's check could have been called back.

[Marcus-SanDiego]

I also have an account with bank A. Call them with your dilemma. See if they have any recommendations for you.

[Mtnman]

^+1. That was my next idea.

[zj96sc]

I by no means wish to imply that my seller is being untrustworthy or dishonest; he's just CYA'ing and I understand completely where he's coming from. I would think that given the amount of financial information of mine that I've given him and the steps I've taken to prove my legitimacy that he'd be OK with trusting the funds, but I am not him and, again, it is not my place to force him to comply with the way I want to do business.

I've spoken to Bank A at length about how to assuage his concerns. They've provided me with a direct extension to provide to him so he can call the auto finance division to verify the loan creation and funding (using his independently verified 800 number from the internet). He has done this and received said verification. During this phone call, they also told him that Chase would do a check exchange (ie exchange my cashier's check for one written by Bank B to him) but as it turns out Bank B Banks won't do this unless the person is a Bank B account holder. This was news to Bank A.

Like we've said...with a bank calling to verify the funds on their own, that's about as good as it's really going to get. In the end of the day though, if the seller really wants to talk brass tacks, he does not have money for a few days and I'm gone with the title. I suppose without a certain element of trust nothing would ever get done...it just sucks that I may miss out on this transaction because he doesn't want to take the leap with me.

Sigh.

[Mtnman]

Well....roles could reverse....you could overnight him the check, let him deposit it and by the time you get there the funds would be good....But then you would be sending him a check without holding anything of value in return.

[zj96sc]

Yeah; although that reversal actually puts me at even larger risk than he's exposed to in the current situation. I would have absolutely nothing; he will have bank verification, signed bills of sale, and deposit receipts.

Really quite frustrating. I suppose this just stacks even more weight in the "reasons to never finance a car" column.

[kpro]

We had a similar dilemma when purchasing the NSX years ago. We ended up just doing a bank transfer once my husband made it to Dallas to get the car...it was quite simple really. No checks or waiting/verifying funds. I just went into the bank here at home and my bank called the seller to get account information and it was completed right there, simple and instant. I'm sure you can set something up with bank A...a friend of mine has also purchased a car this way and it was just as easy he had used bank A in his transaction.

[Mtnman]

Or the "always use brick and mortar banks" category. I keep an account at State Employees Credit Union for this exact reason. Very easy to work with, way more so than national brick and mortar banks.

Good Luck.....Im running out of ideas fast.

[zj96sc]

Ha Ha! I'm here to stump the masses. Thanks to everyone for their input so far. I suppose I intended this thread 33% as me venting, 33% ideas for resolution and 34% lessons learned for future buyers. Any input and experience is helpful.

I also asked Bank A if they could just do a wire transfer queued by a phone call from me. They said the only case where they allow wire transfers is in dealer purchases.

[Mtnman]

When is this all supposed to go down? Could bank A Cancel the order as is and re-issue one to you, where you could cash it? (i doubt they would but.....)
Or, could you use an attorney with a trust account to be a funds broker, similar to a Real Estate Transaction? That might have some potential...
Edit: Could you maybe send the check to an attorney office in sellers area, have him go to said attorney office and sign check to them, all prior to you arriving. Then the funds could clear, but would be held in trust at the att office until you come and seal the deal.

[Mtnman]

Edited^

[zj96sc]

Flight is booked for 8:40PM tomorrow, transaction set for 8:30AM Friday. No time to set that all up before then even if Bank A would consider it. Seller OK'ed the cashier's check from Bank A last week on the assumption (and assurance from Bank A) that Bank B would do the check exchange. Due diligence phone call to Bank B this week to confirm that this would be carried out is what opened this last minute can of worms.

[zj96sc]

Sounds like by virtue of the fact that the account is handled by Bank B even though the check was "issued" by Bank A, the Bank B branch will treat it as verified funds. Saved...for now...i think.

[midlandtech]

my seller was anal about not only the car but his finances and as such seemed extremely anxious about the money exchange portion luckily we were able to go through USAA together since he was military and did a conference call with them where he could ask questions while I was on the line that way there was no confusion he got the peace of mind he was after and I was able to make sure all his questions had answers if for some reason the problem still persists my advice is a conference call between you him and the bank.

[zj96sc]

Bank B ended up cashing the check on the spot. Worked out pretty easily. Teller didn't even think twice.

[danewilson77]

Bank B ended up cashing the check on the spot. Worked out pretty easily. Teller didn't even think twice.

Success!

[Marcus-SanDiego]

Excellent. Glad it worked out.

[Mtnman]

+1. I was pissed for you last week. Sorry we couldnt help, but glad it worked out!