The Difference Between Wet and Dry Funding

Wet and dry funding states can be tricky whether you’re new to real estate or are an experienced agent.  Wet and dry states impact your bottom line which is why it is important to know which states are wet, which are dry and where you may want to focus your business.  If all of this seems confusing, don’t worry.  We’ve put together this blog post to help you learn what dry and wet funding states are so you can know what to expect based on where you do business.

First lets cover the differences between wet and dry funding.

Wet funding states require that all mortgage funds are distributed at the close of sale, along with all other necessary paperwork, such as escrow conditions and signed loan paperwork. Dry funding states require that all funds are distributed after the close of sale and only after all proper paperwork has been completed.

This important distinction directly affects when real estate commission checks are distributed to agents, and when the close of the sale is technically completed. Let’s further define what each type of funding represents and how it differs between states with a couple of examples.


  • Wet funds materialize (are dispersed) at the close of sale.
  • Dry funds materialize (are distributed) after the close of sale.

Example of a Wet Funding State

Virginia is an example of a wet funding state. The “Old Dominion” state requires that an authorized settlement agent completes a number of procedures, including home inspections, title write-ups, and preparing settlement statements.

Once this work is completed funding can be distributed and a house can be closed. Stringent requirements also mandate that the money is cleared and all wire transfers are received before disbursements are made.  Additionally, wet funding states like Virginia require that real estate agents be on record in the county before they can disburse funds for the sale of a home.

New real estate agents typically don’t like wet funding because these strict requirements can be a significant barrier to garnering quick experience.

States Where Dry Funding Is Permitted

Only a few states allow for dry funding, including:

  • Alaska
  • Arizona
  • California
  • Hawaii
  • Idaho
  • Nevada
  • New Mexico
  • Oregon
  • Washington

States like Alaska and California allow for both wet and dry funding, but the real estate agents themselves decide on which to ultimately use. Dry funding is often preferred by real estate agents because it does not require the real estate agent to be on record in specific counties before disbursing.  Dry funding also makes it much easier for real estate agents to operate in new markets and determine the speed of their transactions.  That is why dry funding states are prefered by real estate agents over wet funding states.  

Get More Tips Like These

If you like this post, you'll love our monthly newsletter! You'll get a new theme with ideas for your real estate business from marketing tips to legal advice. Subscribe today!

Get An Instant Quote!