There’s no question that the coronavirus pandemic has made a profound impact on the global economy. Its effect can be felt across multiple industries including the real estate industry. The sectors of the industry that have been negatively affected by the pandemic are entertainment retail which includes restaurants, bars, and hotels. Housing and home building have also been affected. So, what does that mean for a seller or a buyer?
How Covid-19 Has Affected The Real Estate Industry
According to Zillow, an online real estate database, the number of new listings in early April decreased by 19%. The usual surge of buying and selling houses in the spring has not happened. Instead, sellers have opted to delay selling their homes because the future remains uncertain. Some buyers, on the other hand, may be holding on to their down payment until they learn how much the pandemic will impact their financial situation. Others are hesitant because they are unable to view the homes in person. According to a study conducted by OJO Labs, 80% of potential buyers have delayed or stopped their search for a new house. That being said, the same study has found that there are still a number of people who are actually actively looking to buy a house simply because it is now a buyer’s market – low-interest rates and an increased chance of getting a good deal.
It’s not just the lack of the spring surge that’s affecting the real estate market. According to the OJO Labs study, the expectations of the buyers have changed as well. Instead of focusing on location and commute times, some buyers are prioritizing common spaces such as extra bedrooms, an open floor plan, a home office. Real estate experts also predict that buyers will also put more importance on communities, neighborhoods, and lifestyles.
Challenges of Selling a House During the Pandemic
The uncertainty brought about by the pandemic is only one of the challenges faced by sellers today. Millions of Americans are under stay-at-home orders. While some states have allowed realtors to go back to business, some have not. Even if open houses are allowed where you live, home inspections as well as appraisals are usually done in person. Closing is also usually done in person where you come into an office, sign a bunch of documents, shake hands, and give the keys to the property to its new owner. We’ve not even mentioned notarization. All of these are difficult to accomplish in this age of social distancing.
Aside from that, lenders have been declining new applicants, most likely due to the fact that they are busy assisting homeowners with their mortgages. This means that potential buyers might have a harder time getting their loan approved. In addition, the mortgage rates are in flux. Yes, it is currently at a historic low but it is fluctuating day by day. This makes it harder for an applicant to lock in the best rate. It also means applying for a loan is going to take a while. Some lenders’ criteria have changed in order to ensure they’re lending only to those who are financially stable. These include higher credit scores and larger down payments. So, no loan, no sale.
Another challenge faced by sellers during this pandemic is the fact that the house won’t sell itself. If you want to get top value, you need to make your house presentable. That means washing the carpet, painting the walls, replacing fixtures, trimming the yard. Not only will it be hard to get someone to do the repairs for you, but these fixes also require money. With an unstable economy and an uncertain future, investing in your home right now in order to sell it can be risky.
How Prospect Group Handles These Obstacles: Contactless Selling
Yes, selling your house during a pandemic is going to be challenging. But it isn’t impossible. There are different ways you can address the issues that sellers face today.
Virtual Viewing
As we’ve already mentioned, house inspections and appraisals are normally done in person. Social distancing and sheltering in place has made those actions a tad difficult to achieve. Fortunately, technology is on our side. The current workaround is for the property inspection to be done virtually. Inspectors will provide a given report of what was inspected and discovered. Appraisers, on the other hand, conduct their inspection via a drive-by. Simply put, the value of a home is determined by the appraiser while sitting in their car or at a distance. These workarounds allow less contact with other individuals, ensuring that business can be conducted as usual.
In addition, the Prospect Group goes on virtual tours provided by homeowners. These can include online photos and videos inside and around the home. Virtual tours and even meetings with sellers as well as buyers are conducted through Facetime, Skype, Zoom, and other online communication tools. The purchase of a house is decided based on these online tours and reports.
Contactless Closing
Because contact with buyers and sellers should be at a minimum, the Prospect Group has adapted to the situation by conducting contactless closing. How do we do that? First is digital documentation. All paperwork and contracts regarding the sale or purchase of a property are digitized and sent to the parties involved. Electronic signatures are now accepted by county recording officials which allow contracts to get signed while still complying with stay-at-home orders. There’s also remote online notarization (RON). RON is when a notary public provides notarizations from a remote location using audio or visual technology.
The coronavirus pandemic has undoubtedly caused a lot of upheaval in our lives. But that doesn’t mean we can no longer conduct business. Our new normal may require us to do things differently but we can still ensure the same service.
