Despite shelter-in-place orders and pandemic fears, homes continue to be listed, shown, bought, and sold. That's largely because the real estate industry -- as well as buyers and sellers -- have successfully adapted to the social distancing rules in place by engaging in primarily touchless transactions.
From taking virtual tours, consulting with your Realtor via Zoom (NASDAQ: ZM), and holding limited home showings with masks and gloves on to conducting drive-by appraisals and unaccompanied inspections, the players involved have learned to avoid contact and close proximity, using technology and coronavirus best practices to complete all the necessary steps.
And the same is proving true with closings. Thanks to some creative workarounds, many sellers, buyers, and their representatives are bypassing the physical closing table and achieving settlement via alternative means. It's a big reason business as usual can go on in the real estate market these days.
How a hands-off closing works
Chantelle Porter, a real estate attorney in Lombard, Illinois, describes a true hands-off closing as one in which "none of the parties physically appear together at the same time. In my experience," she says, "sellers pre-sign documents with their attorney and notary in advance of the closing. Those documents are then sent overnight or dropped off curbside to the title company before the closing."
The buyer, meanwhile, arrives solo at the title company office, wearing a mask and gloves, in a separate room and can video conference with his or her attorney, if one is used.
"The attorney then proceeds to review the documents with the buyer," says Porter.
Elizabeth Whitman, a real estate broker and attorney in Potomac, Maryland, says documents in a hands-free closing session are usually sent back and forth via an online portal, email, or a courier like FedEx (NYSE: FDX), while funds are sent using wire transfer.
"The title company collects the documents and distributes them, just as in a normal closing, except everything is sent electronically," explains Whitman.
Variations on the same theme
Nancy Brook, CEO/broker with Billings Best Real Estate, a real estate brokerage in Billings, Montana, says she has also witnessed drive-by closings.
"The escrow agent comes to the driver's side of your car with masks and gloves on and hands you the documents through your open window," says Brook. "The agent's assistant stands on the passenger side and collects your signed documents."
In addition, Whitman says she's aware of closings conducted from a large table in an outdoor public location and involving people wearing masks and gloves.
"These closings aren't truly contactless, because people pass papers back and forth to each other," says Whitman.
Porter says socially distanced closings, if properly planned, work well with few surprises.
"Contact-free closings are essential to keeping the real estate business alive during the pandemic. They keep everyone involved safe and, in my case, allow me to be more productive," says Porter.
Rajeh Saadeh, a Somerville, New Jersey-based real estate attorney, agrees.
"A no-contact closing helps deals close nowadays. In large part, all the parties involved have adjusted quickly to this new mode and work to coordinate these closings seamlessly," he says. "The extra steps and distancing involved may cause minor delays and extend the time it normally takes, but it's a small accommodation to ensure that it minimizes the spread of coronavirus."
The biggest challenge with contact-free closings is coordinating any issues or problems that might arise on that date, considering there are numerous people involved at different locations.
"That's why clear and effective communication is necessary, and all parties need to be accessible until the closing concludes," Porter notes.