Picture a drive-thru window at a fast food restaurant: That’s exactly the kind of solution being used to shepherd real estate closings in parts of the country as shelter-in-place and stay-at-home orders hit nearly 30 states during the coronavirus pandemic.
Legacy Title, a title insurance and real estate closing company, rolled out a drive-thru service at its branch in Blaine, Minn., so buyers and sellers can continue to make settlement while taking social distancing guidelines into account. “A few clients told us they were considering canceling their closing for safety reasons until they found out about this option,” says Carmen Jorgensen, an executive closer at Legacy Title.
Traditional closings, of course, are intimate in-person gatherings of all parties to the transaction.
Legacy Title began offering the drive-thru service on March 23 and completed 14 closings in the first week. Another 10 closings via the drive-thru method are scheduled for this week.
Legacy Title President Connie Clancy says the real estate industry in the Blaine area saw a strong level of home sales in March as buyers rushed to take advantage of low mortgage loan rates. These buyers, Clancy says, expressed the desire to continue to the closing table, rather than back out of their deals, in order to lock in the low rates—despite the threat of COVID-19.
Where Remote Closings Aren’t an Option
Twenty-three states have remote online notarization policies, which permit a notary and signer in different physical locations to execute electronic documents. Such policies—the National Association of REALTORS supports similar legislation in Congress—mitigate disruption to the closing process. But borrowers in states without a remote notarization law remain unable to close a real estate transaction without an in-person notary.
This has prompted the industry to explore other alternatives to complete closings. Erica Cuneen, owner and managing broker of Beyond Properties Realty Group in the Chicago area, says her brokerage has completed about six in-person closings in the last two weeks despite stay-at-home orders in Illinois. Real estate professionals, mortgage companies, and title agencies have been deemed “essential” by the state so that they can continue operating normally.
Cuneen’s brokerage, however, is alerting clients to alternative measures for completing closings. For example, buyers in Illinois, who must have an attorney present at closings, can pre-sign documents and give power of attorney to their lawyer, who can then complete the sale on the buyer’s behalf on settlement day. That means the attorney and closer are the only ones who need to be in the room on settlement day. In some cases, documents are being notarized via a drive-thru where a notary can watch the buyer through a window.
Cuneen’s brokerage is advising its clients and agents to avoid attending closings for the time being, unless it’s absolutely necessary. The agent commits to being available on video or via phone, as needed, that day. “We’re having to be creative, but we’re still getting closings done,” Cuneen says.
For buyers, the entire process leading up to closing is being adapted as well. For example, a home inspector may be on the premises alone and video chat with buyers and their agents to walk through the assessment. An appraiser also may be the only person present at a property to complete an appraisal. The real estate agent may conduct the final walkthrough of a property via video with his or her clients or open the home—having all lights on and doors opened ahead of time—so buyers can walk through on their own. Cuneen says buyers are advised not to touch anything, maintain a distance of at least six feet from one another, and wash their hands when entering and exiting the house.
Will Closings Change Permanently?
Drive-thrus and other options for closings are proving to be a relief to some customers who are concerned about keeping transactions on track. “Customers appreciate the ability to close safely from their car,” Jorgensen says. “It’s really catching on.” Many clients also have their children in tow, since many school districts around the country are closed. The drive-thru measure helps them protect their children, too, she says.
Will drive-thru closings stick around after COVID-19 fears subside in the coming months? “Probably not,” Clancy says. “But it is the right thing to do right now. Closings are usually celebrations. But even in difficult situations, essential business like this must happen. Whether someone is buying, selling, or refinancing, we recognize the importance of their investment and want to continue to make this experience as positive as possible for all involved.”
Cuneen says it’s all about figuring out new ways of doing things for the time being. “We’re trying to keep everyone calm,” Cuneen says. “We can still get a closing done, and we’re providing our clients with information on how we’re proceeding. We’re trying to prevent any delays and reassure our clients that everything is OK.”