The real estate market is certainly slowing amidst the coronavirus outbreak, but it’s still possible to finalize transactions that are already under contract. There are, however, new obstacles to face and processes to consider to help your client successfully reach their closing dates.
Keep reading to learn about how COVID-19 can impact real estate closings; and more importantly, what you can do about it.
In order to protect the best interests of your clients in the days and weeks leading up to their closing date, let them know about new addendums available to help navigate certain circumstances that have occurred because of the coronavirus outbreak.
Both the National Association of Realtors and state-specific associations have crafted options. While they’re primarily designed to benefit buyers, sellers can also feel secure knowing that there are protections in place to help buyers feel more comfortable going through with a transaction.
30-Day Contract Extension. Many states, including Texas and Florida, now offer a 30-day contract extension that lets the buyer push back the closing date for another month. They can also receive their earnest deposit refunded if their financing falls through.
Third-party Financing Addendum. This option is a little more seller-friendly. It accounts for slower loan approval times but doesn’t have as lenient termination clauses.
Amendment to Contract. This is another addendum that’s more generalized and lets the buyer and seller tack on extra time to close when a contract is already underway.
These different addendums appear similar but in reality, the nuances can make a big difference in whether a sale goes through to closing and who gets the earnest deposit.
The financial aspects of closing are of concern, but so are the health aspects. Federal guidelines recommend that individuals stay at least six feet apart, making it difficult to configure the physical closing and feel safe.
Agents should regularly communicate with all parties involved to ensure all attendees are feeling healthy and displaying no signs of illness. The number of people at the closing table should also be restricted to the bare essentials. During that time, current sanitation protocols should be followed, including:
Another option in certain states is to incorporate electronic notarization, which still occurs in person, but allows the notary to use an electronic device rather than paper. This makes sanitization easier to handle because the tablet or laptop can easily be wiped down with disinfectant compared to stacks of paper. Electronic notarization isn’t available in all states, but if it is, can help expedite the closing process.
Finally, sellers and buyers should be encouraged to read their paperwork in advance of the meeting. This limits the amount of time spent in person and can also help the closing finish as quickly as possible.
Remote notarization differs from electronic notarization in that the former allows the notary and signers to be in different locations.
Some states have passed remote notarization laws in order to help financial transactions stay on track. According to the National Association of Realtors, the following states currently allow remote notarization (more may be on the way with new state legislation).
The following states allow remote notarization:
Refer to individual state laws for specific requirements on remote notarization as laws may be passed quickly to help combat the concerns of in-person transactions.
Despite uncertainties in the real estate market as a whole, closings can stay on track when everyone involved continues to communicate and prepare in advance. Plus, contract addendums provide an extra layer of security to make sure a transaction isn’t derailed because of longer processing times from lenders.
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