What Parts of a Transaction Require Interaction?
(This is Post #2 in the “Portland Real Estate and Corona Virus. A Broker’s Point of View” series. Post #1: Click Here.)
There’s a lot going on everywhere and real estate is no different. “Doing” real estate while distancing ourselves socially is difficult. Residential Real Estate is a People Event. There are parts of a transaction that can’t be done without interaction and others that folks won’t do without interaction.
Signing loan docs in Oregon and Washington requires a notary and ‘wet’ signatures – virtual notaries and electronic signatures will not suffice. (I don’t know if virtual notaries are actually a thing – it would seem that anything virtual or electronic defeats the purpose and contradicts the meaning of a notary.) So signing real estate documents requires interaction. A second part of the transaction that requires interaction (at least when we use the accepted definition), is viewing the house before buying it.
Now, that being said, almost all risky and significant contact can be eliminated or mitigated with proper precaution. Already a lot of these precautions are mandated by government or company policy.
Let’s start with the Title/Escrow company. I spoke with an escrow agent friend of mine, Sheila Engel at First American Title in Clackamas, Oregon, and asked her what policies they had in place. I’ve also read a number of articles and emails which have touched on the subject.
Title companies are considered an essential enterprise, at a federal level. In order to remain open but still be as safe as possible, in-office staffs have been slimmed down, with as many as possible working remotely. Only folks essential to the transaction should attend the signings. These signings are hosted in a conference room near the front door instead of in the escrow officer’s office. Kids, real estate brokers (like little old me), and loan officers are all personae non gratae. After a signing, the clients (who get to keep their potentially virus-covere pens), take their leave. The room is disinfected and made ready for the next group.
Mobile Notaries, another traditional option, would normally come to someone’s home, sit down and go through documents, cursorily elucidating the contents while collecting signatures. A newer method is that the signers receive, by email, the documents ahead of time. If there are questions, they can, of course, call the escrow officer and ask this very knowledgeable resource. Next, the mobile notary would meet the clients, hand them the paperwork (with signature lines presumably highlighted), clients would sign, and then the notary would collect and check everything. The notary and the signers would never share a space.
Signing real estate documents, an essential function performed by an essential business – and necessarily person to person- can be done with a minimal amount of interaction. The handy thing about the rules and regs here is that all parties are on the defensive – it isn’t one side trying to coerce the other side to conform. Everyone wants to keep a safe distance.
The second necessarily interaction in a real estate transaction is viewing the house. Of course a house can be bought sight-unseen. This happens a lot with out-of-town and military relocations. In this day and age, it’s fairly easy to get a good look at a property without actually getting a good look at the property, i.e. unlimited photos and virtual tours (try googling ‘Matterport’, e.g. – it’s pretty cool).
But if you’re not OK buying sight-unseen, as many are not, here are a few steps more – some good at any time, some that make sense in the Corona Days, some that are required by state law for the time being. Let’s go back a paragraph to photos and virtual tours. Look very carefully at the photos and videos for every property; most agents use professional photographers these days, but if you need more (granted they’re not as beautiful when your agent takes them), ask your agent (‘preferably me’, I wrote, in shameless self-promotion) to go back and get you more. And ask for some video while you’re at it. If your agent won’t do this, get a new agent.
Along the lines of screening properties, if you find something which seems very interesting after viewing photos and looking at the basics that your agent can provide, dig deeper. This is called doing your due diligence. Gather all information you can on the property (this is a task you delegate to your agent): get the seller’s property disclosures up-front, drive and research the neighborhood, check the schools. Dig deep. You may very well turn something up which eliminates the house. Always being this thorough wouldn’t be a bad thing, even once the virus is long behind us. Huge time and energy saver for you and the sellers as well as the agents on both sides.
But finally it happens… it’s unavoidable: you want the house but you need to see it first. What now?
Traditionally when an offer is written, the house has already been viewed by the buyer. In the COVID-19 world, the new norm may very well become writing up offers subject to viewing the house. This means that you write an offer before seeing the home in person. Of course, a pre-approval letter will accompany offers. (Without getting too far into this subject, the more work that the bank has done on your loan file, the stronger and more persuasive your letter.) Once a few more details of the transaction have been taken care of, the house will be available to view.
This will give you an accepted offer on the house, so your interests are protected – the house is off of the market. And now it’s time for even more due diligence. For starters, escrow will automatically do some work for you. Once you have an accepted purchase contract, escrow will be opened (in the states I’m licensed in) and you will deposit earnest money. At this point, the title company will issue a title report. Your contract will also go to the bank who will start working on their checklist. The title report will tell you that the sellers have a clean title to transfer to you; the bank will continue to check on things for you – an underwriter’s job is due diligence.
The sellers are also doing their chores. Before they allow you in, they’re most likely going to ask for Proof of Funds, proof of income and employment (things the bank always asks for but which today’s prudent seller will ask for up-front). This is to the seller’s benefit, not yours, but it does serve to get the deal that much closer to closing before there’s interaction.
At his point, you and the seller have done due diligence and have also used your delegates, the bank (who will also order an appraisal), the title company, an inspector, etc. Both sides should both be feeling pretty good, having done a lot of research into each other. They know you’ve got the wherewithal for the deal, you know the house appears to be physically sound and the title report shows that there will be a clear title to transfer. Finally, it’s time to set up a time to see the house.
All of the subject matter above – how to not view a house – is specific to real estate, a bit of a pain, and requires a team. How to view a house – the time when the interaction actually takes place – is the easier part, enlisting mostly common sense in distancing and cleanliness.
The agents and clients drive separately. Sellers should be asked to leave on lights, open doors and cabinets, make things as accessible as possible so that no one else needs to touch things – good for everyone involved. Hand sanitizer and gloves can be used before, during, and after. And once the showing is over, you and I (do you see what I just did there, making myself your agent?) can discuss what we’ve seen.
Assuming all looks good, which is the hope after all of the research, you’re well on your way to closing. The house will soon be yours!
My name is Robert Thompson. I hang my business hat with eXp Realty LLC. I work in Portland and beyond but I live in south Clackamas County in the small city of Molalla. Please feel free to contact me if you have questions or need help with a real estate matter.