Traditionally, closing on a house required a lot of people in a room together, poring over documents and signing their names. The pandemic has accelerated digital transformation in real estate, with one survey claiming that the number of title and settlement companies offering digital closings increased by 228% and the number of remote online notarizations for real estate transactions grew by 547%. This has impacted the entire real estate process, including how closings are done. As remote closings become a standard practice, understanding what they are and how they work can make purchasing a dream home easier for everyone involved.
A remote closing follows the same process as a traditional closing, except that verification is completed digitally. In a remote closing, the parties can:
Instead of having to take time away from work to travel to an attorney’s office, the parties can complete the transaction from wherever they are. Additionally, for people relocating, this process means less travel and hassle.
The first thing that buyers and sellers should understand is that not all digital closing methods are remote closings. Some use electronic documentation and signatures but still require people to complete the process in-person.
The three most often used models are:
Remote house closings offer convenience, making them seem like an obvious option. However, it’s important to recognize that remote closings have challenges too.
When looking at the benefits of a remote house closing, the three primary ones that often come to mind are:
People need to keep in mind that no process is perfect. Some challenges to consider when closing on a house remotely are:
Since remote closings are convenient, they are becoming more popular. As buyers and sellers navigate this new digital experience, they want to know what to expect.
Buyers need to place a lot more trust in their real estate agents during a remote closing. The agent becomes a partner in the process, engaging in the inspection and final walkthrough. It’s important to interview the agent and talk to other buyers.
It’s also important to make sure the agent has experience with remote closings. Buyers should make sure that the agent understands the process, knows how to negotiate with sellers, finds the right property, and sources local lenders.
Since buyers rely on the agent to do in-person activities for them, the agent needs to be available during business hours. It’s important to know that an agent with another job can make time for these tasks.
With remote closings, due diligence and document review is more important than ever. Without being physically present, buyers need to carefully review all documentation, including:
During a remote closing, everyone needs to be aware of which documents will be signed digitally, including:
The parties may also want to consider including an “electronic signature rider” by updating the transaction documents’ language or adding new provisions.
Usually, the documents that need to be notarized are the:
The notary is a person, commissioned by the state, who attests to the signer’s identity. In a remote closing, the parties will engage in this process using an audio-visual recording.
In a remote closing, the buyer will usually initiate a wire transfer to pay the closing costs. Banks usually process wire transfers in 1-2 business days, but it’s important to remember that they don’t process transactions after the bank closes for the day, weekends or holidays.
In a traditional closing, the seller hands over the keys. In a remote closing, it’s important to determine the timing and delivery of keys in advance, either through delivery or when arriving at the new home.
Notarize’s remote online notarization platform simplifies the notarization process, which can provide enhanced security and streamline the remote closing process. With the NotarizeSM platform, signers can use any device to get their documents notarized, from the comfort of their own homes. Schedule a demo to learn more about how Notarize can help make closing on a house as easy and efficient for your clients as possible.