What does the Virtual Real Estate Closing Process look like?

Understanding Virtual Real Estate Closings

Virtual real estate closings are becoming more common than ever, largely due to the recent COVID-19 pandemic causing a shift towards digital contactless transactions and remote work. These methods are far more convenient than physical transactions, which is why many are looking to conduct virtual real estate deals. This article will explore what the virtual real estate closing process looks like, and how it differs from traditional in-person closings.

The Virtual Closing Process

1. Document Preparation: Before the deal can be finalized, the lender, title company or lawyer will first have to prepare the closing documents, which include the purchase agreement, deed and loan terms, along with any other required paperwork. Once prepared, the documents re transferred to all parties through email or fax.

2. Review and Signing: Unlike traditional closings which must be signed in person, Virtual closings utilize electronic signing platforms such as DocuSign to allow both property buyers and sellers to review and sign the documents from the comfort of their homes. Virtual closings allow both property buyers and sellers to review and sign documents electronically from the comfort of their own homes on any device they choose.

3. Notarization: Notarization is an important part of the closing process, documents such as the mortgage or deed must be certified to close the deal. In a virtual closing, this is done remotely through digital notary services that use video conferencing tot verify the identity of signers and witness the signing of all documents.

4. Funds Transfer: Once the documents have been signed and notarized, the funds are transferred to complete the transaction. Wire transfers or electronic fund transfers are commonly used to send and receive money between the buyer, seller and any third parties involved such as lenders or escrow agents.

5. Recording and Title Transfer: Finally, once all documents are signed and verified, and the payments have gone through, the transaction will be recorded and submitted with the deed and any relevant documents to be officially recorded. Once recorded, ownership of the property can officially be transferred from the seller to the buyer.

Pros of Virtual Closings

1. Convenience: Virtual closings eliminate the need for all parties to be present in-person, saving time and travel expenses while allowing the process to be completed from anywhere with internet access.

2. Flexibility: Because there are no physical restrictions (ex. office hours and travel time) virtual closings offer great flexibility for every step of the process.

3. Safety: Virtual closings minimize the need for face-to-face interactions, preventing the spread of common diseases and reducing the risk for all parties involved. During the COVID-19 pandemic, this was a large reason for the shift to virtual closings.

Challenges and Considerations

While virtual closings offer numerous benefits, there are also some challenges and considerations to keep in mind:

1. Technology Requirements: Virtual closings rely on internet access and electronic devices, so all parties must have the necessary technology and technical proficiency to participate effectively.

2. Legal and Regulatory Considerations: The legality of virtual closings varies by state, and not all jurisdictions have adopted remote online notarization or electronic recording processes. It’s essential to consult with legal professionals familiar with the laws and regulations in your area.

Conclusion

Virtual real estate closings have serve as a modern approach to an age-old process, by using technology to simplify and streamline the closing process for buyers, sellers and real estate professionals. While virtual closings may not entirely replace traditional in-person closings, they offer a convenient and efficient alternative that has become increasingly popular in today’s digital age. By understanding the virtual closing process and addressing any challenges or concerns proactively, buyers and sellers can navigate the real estate closing process with confidence, whether in person or online.

For more information on the virtual real estate closing process or general questions, feel free to contact KN Law by calling (647) 350-1250, emailing [email protected]. To read more about Purchases, Sales, Refinances or other real estate transactions, please visit our main blog page, here.