What is it and how does it work?
Traditionally, when you buy a home, you attend a closing meeting at which you sign all of the official paperwork alongside your lawyer, and then take official ownership of the home. But what if you cannot be physically present for this closing meeting? This sometimes happens when people buy homes in a different city from the one they live in. Meeting in person may also be a struggle for reasons related to the COVID-19 pandemic.
Thankfully, there is an alternative option if you can't make it to an in-person closing meeting. You can instead participate in what's known as a remote closing.
What is a remote closing?
A remote closing occurs whenever you and the professionals involved in the sale of your home—your real estate lawyer, bank representative, title company representative, and, sometimes, even your real estate agent—are not all in the same place at the time you take ownership of the home. These days, remote closings typically take place virtually, with people meeting and interacting over video chat applications such as Zoom or Skype. Sometimes, remote closings are called "virtual closings."
With remote closings becoming more popular, some banks and legal firms have even constructed their own portals and platforms that can keep everyone connected during the home sale process.
How does remote closing work?
When you close on a home in-person, a lot of the work happens during one final closing meeting. Remote closing often works a little differently. Various parts of the transaction can be performed one step at a time, with all involved parties tracking progress through the portal. For example, early in the process you will work with the bank and submit your loan documents. The title company will conduct their search and upload their relevant documents to the portal. Then, your lawyer will review everything, in collaboration with the seller's lawyer.
Once the title company and lawyers have done their part, paperwork will be prepared for you to sign. In a remote closing, you can sign all of this paperwork virtually with document signing software. If you're not comfortable with this, you can instead download and print the documents, sign them, and then send them via an overnight delivery service to your real estate lawyer or title company.
Typically, your closing costs are paid at the closing meeting via a cashier's check or certified check. When the closing is done remotely, you can typically pay via a wire transfer from your bank instead. You will need to set this up with your title company and lender in advance.
Sometimes, in order to simplify a remote closing, you can execute what's known as a limited power of attorney to your real estate agent. This basically gives your real estate agent the ability to sign on your behalf, only on matters related to your closing. However, this approach has become less popular lately as video conferencing software and virtual signature software have made it easier for buyers to be virtually "present" at closing, even if they are not there physically.
If you buy property out of state, or if you are uncomfortable gathering in-person, then you can set up a remote closing with your lender, lawyer, and title company. Once all of the paperwork is prepared and signed, you will be given the title to the home and your closing will be complete—just as legitimately, and with a lot less hassle, than if you were to have met in person.