The Covid-19 pandemic has resulted in numerous changes across the globe regarding the manner in which various transactions are conducted. The real estate market is a perfect example of this, as home sellers have had to adjust to new and often difficult safety protocols in how to first show the home to prospective buyers, and then how to proceed with closing the sale.
Traditional closings typically involved both the seller and buyer, their real estate agents, and other necessary parties sitting down together to sign the appropriate documents and complete the closing. But with social distancing a high priority in much of the country, this type of closing is no longer feasible.
Instead, alternative closings have been developed, enabling real estate sales professionals to continue to conduct successful real estate transactions without the need for face-to-face meetings. While the manner in which these alternative closings are handled may vary slightly from state to state, the intention remains consistent — to enable the sales process to continue smoothly, safely, and securely.
In a contact-less closing, all parties involved will complete the closing with as minimal contact as possible with each other. Some real estate professionals have developed a sales process where all documents that need to be signed will be done so electronically. In other contact-less closings, paperwork will be hand-delivered or emailed, and documents will be signed in separate locations.
Regardless of the various safety protocols, the main point is to allow the closing to continue without the need for contact with other involved parties.
This is similar to the contact-less closing, but parties will handle the signing of their documents in their own cars at a specified meeting location. Many title companies began offering drive-thru closings as an option very early in the year when social distancing measures were first implemented. Some even make use of drive-thru windows to complete a closing, in much the same way as you would order and pick-up an order from a drive-thru fast food restaurant.
Mobile closings are another option for those who wish to practice safe social distancing. A notary will travel to your home to witness you signing the documents. Mobile closings in this manner work well with those who are already familiar with the home buying process and don’t have a lot of questions.
As part of the sales closing techniques, some sales managers will conduct the closing with all parties via Facetime or another video chat app.
Different states will have different laws regarding what types of closings are allowed, but one factor that is consistent throughout the nation is that portions of the closing typically need to be performed in front of a witness. This is primarily to prevent fraud. The presence of a notary is, of course, still possible during many of the above contact-less closings, but there may be a few extra steps involved, such as providing additional identifying information or downloading specific software that facilitates the notarization process.
To check if your state allows online closings with a notary via chat apps, you can visit the National Notary Association website.
Another part of the closing process that was typically done in person was the handing over of the closing funds, which were then disbursed by the title company or closing attorney. However, even before Covid-19, many real estate professionals were switching to electronic money transfer platforms instead of cashier’s checks.
An ACH transfer platform, such as paymints.io, for example, is safe, secure, and convenient. It is also especially viable during the Covid-19 pandemic and enables parties to complete a closing while still maintaining social distancing. It eliminates the need for the buyer to travel to the bank and meet with the real estate agent to hand off earnest money funds and closing cost payments.
ACH transfers via secure and compliant money transfer platforms such as paymints.io also aid in reducing the chances of identity theft and real estate fraud, a larger concern in contact-less real estate closings. Using bank-level encryption and security protocols, paymints.io tracks all money transfers and ensures that the parties involved in a transfer are exactly who they say they are. This eases the burden on title companies and agents in worrying about dealing with parties via virtual means only.
It is understandable that there may be many concerns on the part of buyers, sellers, and other parties involved in a real estate transaction. Additionally, due to new safety and social distancing protocols, delays are sometimes inevitable. It is recommended that real estate professionals add a coronavirus addendum to the contract to cover Covid-19 related delays. For example, if one of the parties were to get sick, the addendum would allow for the delay.
Likewise, with delays during the home inspection or appraisal process if there are concerns about allowing the inspector or appraiser into the home. A shortage of inspectors willing to enter other people’s homes might also delay the process. It should be noted that while home inspections cannot be done in a virtual manner, alternative appraisals in which the appraiser performs the appraisal by looking at comparable comps instead of visiting the house is allowed in many states.
Overall, there are quite a few alternatives that can allow for real estate closings to continue with as little stress and delay as possible. If parties must meet to sign documents, each individual can have their own pen, sit apart from each other or in separate rooms, and ensure that everything is properly sanitized before and after the meeting.
The mortgage process from beginning to end can often be stressful enough even when there isn’t a pandemic going on. As a real estate professional, it is now also your job to help alleviate some of the concerns and frustrations buyers and sellers may be having in regards to the closing and other stages of the mortgage process. Inform them of the alternative methods for closing so that they know the process will still go through, and attempt to ensure them that while there may be occasional delays, by no means is the mortgage process at a standstill.