Real estate closings go virtual

Lenders and title companies adjust practices due to pandemic

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By Lacey Sikora

Contributing Reporter

Local real estate agents have weighed in on these pages about the changes the pandemic wrought on their practices. In-person open houses are out. Virtual open houses are in. Spending the day in the car with your agent touring houses is out. Perusing listings from the comfort of your own couch and choosing a select few to visit, arriving in your own car is in.

Sellers used to spend hours cleaning before showings. Now they also spend hours cleaning afterwards. Booties, gloves and face masks make everyone feel more comfortable. 

Once the stay-at-home orders ended in May, buyers, sellers and their agents quickly found new footing, which helped fuel a brisk summer and early fall real estate market in the near west suburbs.

Other professionals involved in real estate transactions saw a few changes themselves, and as the pandemic continues to affect daily lives, they see many of these new practices sticking around for a while. 

For Mary Pellegrini, executive vice president and part owner of Prairie Title Company, which is headquartered in Oak Park and has 11 offices throughout the Chicago area, the summer and fall have been about adaptation.

Pre-pandemic, she recalls, it wasn't unusual to have a crowd in the closing room at the title company. Parents brought children or in-laws to the table, and that was on top of the notary, attorneys and real estate professionals present.

Today, there are far fewer chairs at the table. 

"The seller is not usually coming anymore," Pellegrini said. "The realtors are not coming at all anymore. There are not as many people in the room, because now we know the virus is spread by airborne exposure."

Masks are required in the room, and she says frequently the only people there are the attorney and the buyers. 

"We're talking three to four people in addition to the closer," Pellegrini said. "In the old days, it was eight or more. That's all changed, and it's changed very quickly."

She says that Prairie Title also has a Plexiglas structure they can place on top of their round tables to divides them into four parts with a space at the bottom to slide documents through. The title company has also instituted strict sanitizing procedures in between closings. Pellegrini says all of these steps make people feel more comfortable.

 In-person closings are the norm for a purchase that involves a mortgage loan, because Illinois still requires that borrowers verify their identities with a notary as a witness. A few states have moved to allow this service to take place online, but Illinois has not followed suit. 

Pellegrini says that for refinances or all-cash deals, there are more ways to innovate. Cash deals can be done via FedEx and Zoom, and signing documents can be done remotely or at a distance.

Due to the historically low interest rates, Pellegrini has seen a rash of refinances this season and says that the industry has been creative about getting this done in a low-touch, outdoor environment. 

She has seen attorneys sit in a car next to the homeowners, each with a set of identical documents in their car. Parents with children will leave one parent in the car with the kids while the other leaves the car to sign documents and then switch places. Notaries are travelling to peoples' homes and verifying their identification on front porches. 

Pellegrini says that these accommodations have proved very popular. 

"Almost everybody who can is opting for these options," she said.

Through it all, Pellegrini says that Prairie Title and others are working hard to make the process safe for their clients. 

"This is probably the biggest transaction people will ever make," Pellegrini said. "Homeownership is how people build wealth. We are grateful to be able to do this essential work."

On the mortgage side, Claude L'Heureux, vice president residential mortgages/consumer lending for Forest Park National Bank, says that he has seen a lot of changes in what has been a very busy selling season. 

One change is that mortgage lending guidelines have been tightened to get the most current information from borrowers. 

"Recency of employment is paramount," L'Heureux said. "Especially for the self-employed."

The pandemic has made lending challenging in some ways, because working remotely creates inefficiencies in the process. 

"Turnaround time has increased for appraisals and underwriting," L'Heureux said. "The time it takes to get everything done has changed."

He notes that locally, there has also been a much higher volume of transactions, which he says is a good thing, but that volume also contributes to transactions taking longer to underwrite. He notes that many in the industry were putting in seven-day work weeks over the summer.

L'Heureux was not surprised to see a lot of refinancing activity this summer. He points out that interest rates in the 2-percent range were very motivating for existing homeowners. 

But, he was not expecting to see all of the home purchases. 

"Surprisingly, we've been doing a lot of purchase financing, and we've been noticing a lot of second home financing in Michigan, Wisconsin and Indiana," L'Heureux said.

He was not expecting to see so many people opt to purchase a second home, but says that the pandemic made people change their priorities. He thinks it's possible those second home purchases were fueled by people wanting to get out of town more easily, the stock market rebounding, the realization that more far-flung travel is not as easy or some combination of these factors.

Overall, L'Heureux acknowledges that after the spring shutdown, a busy summer and fall were nothing to complain about. He says that while things are starting to slow a bit, he continues to caution all of the parties to the transaction to be patient with the lending process.

"In general buyers, sellers and realtors want to get to the closing table as soon as possible," L'Heureux said. "Lenders need to manage those expectations. There's a push-pull situation."

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Susan Montgomery from Chicago  

Posted: November 11th, 2020 3:42 PM

Good story! It's amazing how different the real estate markets are in the city vs. the suburbs. We just moved back to Oak Park after years in the city, and we had great assistance from our realtor, Greer Haseman, who was "uber careful" about following all the safety measures in this pandemic era. Likewise, the only other person at our closing was our attorney. It's a seller's market in the suburbs but a buyer's market right now in the city!

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