Until the economy settles down after the shelter-in-place orders are lifted, buying a house is going to be quite a challenge. However, if you are a frustrated first-time buyer, or a move-up buyer, who is tired of looking for an affordable new home but wants to buy while rates are super low, there’s nothing to lose by giving it a try.
If you are patient, persistent, inventive, and unafraid of doing things differently, you just might get a better bargain on a property that’s as good as any you could find either before or after the coronavirus crisis.
The real estate industry is struggling to serve buyers and sellers during the crisis. According to an April survey of its membership by the National Association of Realtors, 26 percent say they can complete nearly all aspects of transactions while respecting social distancing. With minor modifications such as using masks and gloves, 34% of Realtors in the survey felt person-to-person interactions were still required.
Fewer Listings and Less Choice
There are fewer listings now, so you have fewer opportunities to buy. Since mid-March, new listings have declined 50 percent or more in some markets. Even though the crisis hit just at the beginning of the spring sales season when supplies of new homes for sale reach a peak, this year sellers are waiting until conditions improve. Also, many sellers are pulling their listings. They are not prepared to go through with the process of selling in this environment. When conditions improve, many will re-list, and for most, their MLSs will reset the days on market number on their listings to zero. About 15% of sellers have reduced their prices.
During the crisis, the number of active buyers has declined dramatically. Only 8% are still actively looking, but among those, 63% expect prices to fall. The number of showings tracked by ShowingTime has fallen by about 40% to 50%. No doubt, many of these continue to track listings and trends in their local markets, but they have told their agents they have withdrawn from the market.
Want to Sell? You’ll Need to Overcome These 4 Obstacles
Here are the four most difficult hurdles buyers have to overcome to complete a transaction in the coronavirus era and options to overcome them. Some of these solutions would not be possible without the technology available in real estate today.
- Showings. Nearly all homeowners allowing traditional showings have new requirements to protect themselves. Buyers may be required to sanitize their hands, wear gloves, and “footies” to cover their shoes. Some brokerages as making “video showings” to present the house and answer questions online.
- Home inspections. Only 3 % of buyers can conduct traditional home inspections. Buyers who are making offers during this crisis are including “coronavirus contingency clauses” that allow them to cancel the contract due to the crisis.
- Appraisals. Fannie Mae and Freddie Mac have reduced their requirements for mortgages they buy to allow appraisals without an interior inspection. Instead, “desktop” and “exterior” appraisals will suffice. Even so, some lenders still require appraisers to conduct internal inspections.
- Closings. Gathering four or five people together in a settlement attorney’s office to review and sign mounds of paperwork is a problem, so many closings have become “e-closings.” Most of these documents must be notarized. “Remote notarizations” are now available in about one-third of all states. The National Notary Association maintains an updated list.
Your Agent Will Make a Difference
The coronavirus pandemic has created an environment that is making it hard for professionals, ranging from agents to appraisers, to do their jobs. In some cases, technology will help them get through this trial. In others, only persistence and hard work will help function and protect their health and the health of their clients.
If there ever was a time homebuyers needed the best professional help they can find, this is it. You will need an agent who is expert with social media, who intimately knows your market and is tuned into the neighborhoods where you want to buy. Look for someone with great connections and will hear about houses coming on the market before they are listed and is up-to-date on the most recent local sales. Don’t settle for someone just because of a recommendation from a relative or a friend. Check out their ratings and talk to past clients.
Do they have all the tools they will need? Do they have close contacts to get you any inspections you may want? Does their office have a supply of masks, gloves, and hand purifier for customers in the event you need to see a property right away? Do they listen to you and know your “must haves” in a house?
Finally, don’t get frustrated with the time your house hunt will take. When the real estate markets return to normalcy and new listings hit the market like a tsunami, you will be several steps ahead of the competition.
- COVID-19 Closures and Working From Home: 5 Tips to Make it a Smooth Transition
- COVID-19 and Its Impact on Real Estate
- 39 Ideas for Kids and Adults to Stay Entertained While Social Distancing
- Free Resources to Navigate the Coronavirus at Home
- Tips for Coping with Loneliness While Self-Isolating
- Six Tips for Selling During the COVID Crisis