When will the selling, buying and financing of houses return to normal? It’s impossible to say, of course. That all depends entirely on when the coronavirus pandemic finally ends. But it’s highly likely that real estate won’t return to normal at all, at least not as we know it today. Actually, much of what could lie ahead has been unfolding for some time. It’s just been hastened by COVID-19. And it all seems to revolve around technology.
Take open houses, for example. For years, many sellers insisted– and most agents begrudgingly complied– that their agents open their homes to any and all visitors between certain hours on the weekend.
But the practice is somewhat controversial. Some agents swear by them, but others say they are a waste of their time. The only thing they are good for, the naysayers maintain, is as a way to latch on to potential buyers they can put into their cars and drive to other houses on the market.
Truth be told, at least according to the latest profile of buyers and sellers from the National Association of Realtors, only 4% of all buyers started their search at open houses while 44% first started looking online. Furthermore, 84% used the internet as their chief source of information versus just 14% who got their info from open houses.
Perhaps more important, 52% eventually found the home they purchased online. Open houses? Just 6%!
How Open Houses Will Forever Be Changed
During the COVID-19 crisis, which at this writing is far from over, open houses have been banned in New York, California and several other states. So agents, working from home and practicing social distancing, have arranged for virtual tours so would-be buyers could view places of interest from their own homes. Live-streamed house tours, 360-degree photos of each room and video chats with clients have become the order of the day– better yet, Homes.com offers virtual tours of listings right on their website.
In Virginia, the state’s Realtors group already has a sight-unseen form that protects sellers against buyers who want to back out because the never visited the property before signing the contract. And when it comes time for personal visits, safeguards are being put in place. Masks, gloves, sanitizer and even elbow bumps are now normal.
The firm requires sellers to notify their agents if they aren’t feeling well so their houses could be withdrawn from personal viewing and all in-person showings have to be approved by the seller on an appointment-only basis. Buyers, meanwhile, are told to meet at the property; agents and buyers “will not drive together.” They also are asked to keep their hands in their pockets, allowing only the agent to open doors and turn on lights. If a buyer touches anything, they are required to apply disinfectant afterwards.
Those kinds of extra cautious practices will assuredly end when the pandemic does. But open houses? They might finally be going the way of dinosaurs, replaced by virtual platforms, from basic FaceTime visits with sellers holding the camera to more in-depth video tours.
During a recent webinar, Plano, Texas-based sales trainer Hoss Pratt advised agents to build digital machines to sell houses during the pandemic and beyond. “Now’s the time,” he said, “it’s the path. We’re in a virtual world. You can reach way more people and provide way more value.”
“The fact is the purchase and sale of real estate is a one-on-one private endeavor,” agrees Robert Goldman, a retired attorney who is now a real estate agent in Venice, Florida. “It always has been. With the advent of technology, I am finding it can be more direct, focused and efficient.”
The Future of Mortgage Lending
The practice of buying and selling houses is nothing if not a high-touch business, and that extends from realty agents and builders all the way through to closing the transaction. It encompasses lenders, appraisers, lawyers, title companies and a whole host of other fields, most of which require interactions with people and property.
These essential fields also have been behind the curve when it comes to technology. But the pandemic has forced some to move closer and closer to all-digital models, which could become the new business-as-usual when the COVID-19 crisis is over.
In the mortgage sector, some companies are temporarily halting all lending while they line up their funding sources; others are going out of business, and at least one, UFF West Funding in Irvine, California, has “temporarily” ceased taking applications from borrowers with credit score below 660.
But most local lenders remain open and are working digitally.
In normal times, loan officers are required to hold forth in a licensed office. But these aren’t normal times. So government regulators have relaxed the rules, allowing them to work from home, where they can take applications online, send out documents over the Internet and take signatures that way, too.
Appraisal regulations have been relaxed as well. The Federal Housing Administration now allows exterior-only inspections or desktop-only valuations to minimize contact and potential transmission of the virus. Similarly, Connecticut has eliminated the witness requirement for remote notarizations.
The changes are only temporary, but if it works and lenders and their investors are satisfied, who knows? Certainly, digital tours may help appraisers, whether they are created by agents or sellers.
“Most people have a smart phone with a good camera, so this is the lowest-friction way to do this right now,” said Kenon Chen of Clear Capital of Reno, Nevada, which is giving away a tool that allows sellers to provide information and interior and exterior images of their homes to lenders and appraisers, all online.
Closing on a House in the COVID-19 Crisis
Even closings are taking place remotely. And more than a few lenders feel like Shashank Shekhar of Arcus Lending in San Jose, California, who told National Mortgage News recently that all settlements need to go digital. “There is no reason why borrowers should still go to the title [agent]/attorney to close on a mortgage,” he said.
Who knows what will stick and what won’t? But let’s give Goldman, the Florida agent quoted earlier, the “last word” on that, if there can be such a thing at a time when the virus has yet to peak.
Just a few weeks ago, he worked with a buyer who followed him in his car rather than ride along. His car is stocked with gloves, booties and disinfectant wipes just in case there is a need for in-person contact, and his listings are equipped with the same personal protective materials.
But, Goldman says, “I have shown buyers homes through virtual tours. I have used the internet for the electronic signing of documents. I have walked sellers and buyers through a seamless process such that all buyers and sellers, even the unfamiliar, have become learned in the ways of ‘tech.’
“Technology today makes the sale of homes adaptable, regardless of circumstances beyond our control.”