Around the Thanks-giving holiday I was extremely fortunate to have three buyers have their offers accepted. Wow! The task of completing inspections and signing off on contingencies took the forefront once the initial excitement wore off.
Until recently, when I told clients about digital signatures and Docusign, I was met with either a blank stare or a look of concern. Questions like: “Are you sure this is safe or even legal?” were common. Fast forward to real estate today and the digital age. It is the rare buyer or seller who even blinks when I tell them about signing documents online. Most people do some form of banking or bill pay online, and the next step to signing contract documents online is easy.
While writing offers, there were conversations with all of the parties of my November transactions about signing documents. As I wrote in December: “San Francisco is different.“ Between Thanksgiving and Christmas, all of my buyers were traveling, and not just to Tahoe. During this period, there were trips to Canada, Asia, Southern California, Chicago, and Hawaii. There were also sellers’ travel plans and their agents’ travel plans to consider.
Travel plans are frequently a consideration today, so buyers and sellers must clearly understand that time is of the essence in real estate. Digital signatures and the ease of signing online is great, but buyers and sellers still need to carve out the time in their busy schedules to read documents, ask questions, and understand what they are signing.
When deadlines are not met, there is the risk of falling out of contract. This may cause the buyer to lose the home, or the seller to lose a good buyer. This is especially critical today for buyers, when many homes have back-up offers and sellers do not have as much incentive to be accommodating to buyers’ travel plans, or other reasons that may delay close of escrow. Normally the seller’s goal is to close escrow in the shortest time possible.
Contingency deadlines detailed in the contract need to be met. Remember: Time is of the essence. This does not mean the ratified contract is cast in stone. Along the road to closing escrow, it may be possible to add an addendum to a contract to change deadlines. This requires agreement between buyer and seller.
Digital signatures are great for contract documents, but when it comes to escrow and loan documents wet signatures are necessary unless the purchase is cash. Oh, the groans when people hear this. San Franciscans are used to life online and the ease of being anywhere in the world, at home, or in their office to do business. Wet signatures while traveling will require making plans in advance. This will mean going to the title company’s office in another city, having a notary public meet you at a place of your choosing, or in a foreign country you will need to make an appointment at the American Embassy to sign escrow and loan documents. Mailing the escrow package back to the title company takes extra transit time, but all of this can be managed by planning in advance. Another possibility is giving someone a power of attorney to sign escrow and loan documents and have someone else do the signing. When there are two buyers buying a property and one is not available to sign, this is an easy way to complete the signing and avoids additional document transit time.
The documents in a real estate transaction sometimes can feel like a moving target, because the rules keep changing. The National Notary Association in conjunction with some states is, and has been for some time, working on establishing an acceptable digital notary process. Also, there are some banks that will allow digital signatures during the processing stage if they receive a specific, mostly proprietary, certification from the real estate agent. You can compare this with banks’ eventual acceptance of faxed signatures. It is best to ask your lender if they accept digital signatures at the time you apply for a loan.
Most home buyers and sellers are involved in only a few real estate transactions in their lifetimes, and it is quite normal to feel anxious about how, when, and what you will be signing at escrow closing. Real estate today is an international business, and escrow officers and lenders are well equipped to deal with the nuances of your travel plans and get the job done to close escrow on time.
Combining both digital and wet signatures is accomplished every day. The key is planning in advance. Be sure to tell your real estate agent, lender, and title company about your travel plans immediately when you first make an offer, and you can expect a smooth escrow closing with no last-minute surprises.