Virtual Closings Prove Logical End Step to New York’s Real Estate Transactions in Age of Covid-19

Brokers and sellers are figuring out ways to sign off on apartments entirely remotely

In keeping with social distancing and public health rules, New York City’s real estate agents are turning to technology to close deals amid the coronavirus pandemic.

The city is the epicenter of the Covid-19 crisis in the United States, with 68,776 confirmed cases and 2,738 deaths, as of Monday evening, according to the New York City Department of Health. The state’s PAUSE order, which was first enacted on March 20 and closed nonessential businesses and schools, is now in effect until April 29, at least.

As such, real estate activity has slowed down, but closings can still, in some cases, happen.

“Obviously this is a strange and difficult time for everybody,” said Alex Horn, a New York City real estate developer and investor alongside his father, Myles J. Horn. The pair are behind projects including the recently redesigned 27-story condo building at 175 West 95th St.

With several contracts outstanding and supposed to be closing in April and May, “we’ve been working very, very hard to set up a remote process for everyone,” Alex Horn said.

On Thursday evening, the Empire State Development Corporation (ESDC), New York state’s economic development organization, released a statement saying that though real estate transactions are essential, it does not mean “business as usual.”

“Business can only be conducted if social distancing and other public health protocols are followed and all must be doing everything they can to help stop the spread,” the statement said. “For real estate, that means brokers can only transact business in their offices or show properties virtually, and anything else is off limits.”

Closings in this climate are taking an enormous amount of coordination, according to Alex Horn.

Transactions involve “the sellers, which is us, the developer, the purchaser and our two attorneys, along with banks on both ends,” he said. “We are all talking and everyone needs to be on the same page and coordinated.”

Everything’s happening remotely, he said, including wiring funds, signatures, and where that isn’t possible “our amazing law firm has a paralegal drive to an attorney’s house with a mask and gloves and come back.”

Also crucial to the process has been the ability to utilize electronic notarization, Myles J. Horn said. The measure was introduced by Gov. Andrew Cuomo on March 19.

Broker Sabrina Saltiel of Douglas Elliman, who has one closing coming up this week and closed on another deal last week, is also utilizing virtual closings, which to her knowledge, can take place on all types of properties, she said.

“We’re not seeing clients,” Ms. Saltiel said. “We don’t want to put anyone at risk.”

Inspections, which are at the discretion of the buyer, Ms. Saltiel said, can also be executed virtually.

“Some people waive them but most want to see the property before closing,” she said. “In a couple of cases we have made arrangements for the buyer to go in alone and take photos or FaceTime for any issues and that has gone smoothly so far.”

Many closings happening right now were agreed upon before the current crisis. For the deals that have yet to happen, online marketing materials are proving beneficial, according to Ms. Saltiel.

Ms. Saltiel is on the sales team at the Towers at the Waldorf Astoria. The famed hotel is currently undergoing a full restoration and will be home to 375 residences, plus 375 hotel rooms and suites.

For the Waldorf Astoria, “we have a ton of information that we can share with brokers and clients. It whets their appetite,” she said. “We have the ability to get people’s attention right now—and people who are not rushed—in a way that we’ve never had.”

“Now is not the time to heavily market property, but if you’re going to be looking, we have strategies and materials that will give you a very good sense.”

Contracts can be signed on new homes easily.

“Everything is done remotely online anyway. You can DocuSign, you can wire money, there’s nothing that you need to do in person. Our whole lives are moving that way now,” Ms. Saltiel said. “You don’t even have to get out of bed to buy an apartment.”

Despite the ease, new contracts signed—at least in Manhattan’s luxury sector—have all but disappeared, according to Monday’s weekly Olshan Report. Just two deals were made in the week ending Sunday for homes priced at $4 million and above, the same amount as the week prior.

In New York City, “We have an amazing elasticity and an amazing ability to right the ship,” Myles J. Horn said. “I think things will go back to normal and relatively quickly.”

But, “it wouldn’t be so terrible if we learned a little from this” and streamlined some of the processes, he said.

Source: Liz Luckman, Mansion Global

Filed under: Headlines by Alec Reimon
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