CLOSING TRENDS - What We Lack in Volume, We are Making Up for with Success

CLOSING TRENDS - What We Lack in Volume, We are Making Up for with Success

by Michael H. Wasserman

Our April stay-at-home order ends tonight, and the May stay-at-home-order starts at midnight. The sequester is dead. Long live the sequester. Here’s what you need to know about the closing real estate contracts in Chicago right now.

Contract Activity: We are still open for business and taking in some new really solid purchase and sale transactions (more on that in a moment). But, as is the case for most of the colleagues I talk to, the numbers fall far below seasonally appropriate levels. I don’t want to say that its slow, but birds are building nests on our office printers. (They outgrew their perches on the typewriter and fax). I’m the new Maytag repairman. Our numbers are not statistically significant right now, but some intel is available on Gary Lucido’s blog and at CribChatter. Both are on my regular reading list. Good stuff.

About those new contracts. I am taken by the fact that they are pretty “normal” deals. No short sales. No fire sales. No crazy investors. Fewer ill prepared first-time buyers. The pandemic’s first weeks brought a lot of panic into the market. Contracts cancelled left and right. That panic gave way to a secondary wave of contracts falling apart due to buyer layoffs and job eliminations. Buyers going under contract now are showing confidence in stable employment situations and have made peace with the current situation. Sellers are showing good judgement in price and inspection-related negotiations. We are closing out attorney review  and inspection contingencies on the new deals coming into the office without too much drama and little delay. We consider this a good sign for increasing market stability and increased activity in the coming months.

There are some other storm clouds forming on the lending horizon but lenders, for now, are still processing loan applications and funding approved loans.

Closings: Even under the best of circumstances closers work hard and live with enormous stress. The working conditions have changed dramatically but they are still showing up for work every day and getting our client deals done. I cannot fully express my personal appreciation for their collective efforts. Know that they are working harder than ever before, almost always with a smile and in good cheer. Really amazing people. Public displays of affection, thank yous and other tokens of appreciation are being rightfully directed towards for hospital workers (my daughter, Jenna among them), grocery store employees and the deliverymen who are helping us get by. 

The title companies – and most specifically – their closers are doing yeoman's work that is being grossly unrecognized. They really deserve our thanks and appreciation.

Different title companies have taken different approaches to keeping their staffs, us attorneys and home buyers and sellers safe.  Some have closed their physical offices altogether and make buyers and sellers sign in advance or out on the street (OK, in their cars, out on the street). Some are developing robust arrangements for remote signings. Others not so much. Some still allow table closings. At least a couple of the smaller agencies have stopped handling closings altogether and are contracting to their underwriters to handle settlements.

Many recent closings have gone decidedly well. Quick, efficient, pleasant. Still, too many closings going roughly. There are a lot of things that can – and do – go wrong. Lawyers and lenders who do not answer their phones or watch for closing related emails slow things down. Lenders deliver too many loan packages at the last minute. Everything stalls while buyers try to review loan documents via phone or video with their lawyers. We waste too much time waiting for lenders to review signed documents and issue funding authorizations.

Lenders are still resisting the use of any of the several emerging “flavors” of remote signings. The state, the title industry, the lawyers and public at large all want to see this. The lenders are still dragging their feet here. It is their money. They get to make the rules. I get to grouse.

We expect closing processes to improve in the coming weeks. The slow-down in new transactions will allow everyone more time to develop their work-flows and everyone is gaining experience in the new working environment and many are getting better. Title companies are holding up their end of the closing bargain.

One notable disturbing trend in the closing process – while lenders continue to prevent borrowers from signing loan documents remotely, at least one national lender is actively discouraging borrowers giving powers of attorney to let their lawyers sign loan documents for them. We like this approach as our clients stay safe, at home, tasking actual document signings to us. We stay closer to the title company officers and lenders to assure proper supervision of the closing process. We think these closings are going the easiest and clients are having the best experiences.

Instead, this lender is advocating curbside closings as its preferred mode of operation. I don’t know about you, but I don’t treat my client’s loans like fast food cheeseburgers and I just don’t like drive-through closings. At 6’2” and 220 pounds, my Accord is great for transportation, but no place to sit and comfortably sign 110 pages of lender paperwork. These may be necessary evils, but they should be used only when absolutely necessary. Lenders who care about the customer experience should really reconsider which is the lesser of the two evils here. Of course, remote online notary would solve both these problems, but as we know, this is not in the cards. At least now.