Buying or Selling a Home During a Pandemic Happening at Different Speeds Across the Country
Spring is in the air. April showers are bringing May flowers. And usually that means homebuyers come out of their winter hibernation looking to upgrade into a new house.
Historically, spring is the busiest time of year in the housing market. But not during a global pandemic.
COVID-19 (coronavirus) has put a stop to practically every non-essential activity in the world. And while in most places real estate is still considered an essential business, there’s no doubt that transactions have slowed.
According to the National Association of REALTORS®, sales are expected to dip by at least 10 percent, although with the amount of people losing their jobs because of the pandemic, that number could double, or grow even more.
But sales are still happening.
Sure, the protocols of purchasing a home are changing – and maybe forever in some ways – but that doesn’t mean potential homebuyers don’t see this as a golden opportunity to buy a home.
With interest rates at rock bottom and with a number of potential buyers sitting out the pandemic by practicing social distancing, the market is shifting from a seller’s market to a buyer’s market rather quickly.
“I’m the busiest I’ve ever been,” said Leila Vold, a member of the Quad City Area REALTORS® Association in Bettendorf, Iowa. Quad City REALTORS® are usually licensed in both Iowa and Illinois.
Vold said that during the last week in March, as COVID-19 was gripping the entire country, she had a listing in East Moline, Ill. and had a full-price offer in less than 48 hours. She talked to the interested buyers and has been working with them to find other homes in the Quad Cities area.
“I picked up another listing the next day in Le Claire, Iowa and I had six showings already,” she said about a week later.
“Yesterday, I showed [yet another] buyer two houses in Illinois,” she said at the time of her interview on April 1.
Vold, who works for Realty One Group, based in Davenport, Iowa, said that part of the reason she has been so busy is that in both Illinois and Iowa, real estate is considered an essential service.
I have to admit it’s scary because we have Chicago in Illinois and things aren’t great there (as far as COVID-19), so for now I’m just really thankful that we are considered essential here.”
That is not the case in states like Michigan, Pennsylvania and Vermont.
“Pennsylvania is so restrictive we are in a position where it is virtually impossible to show and sell a home,” said John McFadden, a REALTOR® with the Suburban West Association of REALTORS® in Philadelphia’s western suburbs.
McFadden, who leads the John McFadden Team for Re/Max Hometown REALTORS®, said all in-person showing of homes are not allowed based on restrictions handed down by Gov. Tom Wolf. In neighboring Delaware, agents were able to receive a waiver to allow for one-on-one showing of homes. But, the challenge for real estate in states like Pennsylvania, is trying to find alternative ways to keep the real estate market from becoming completely dormant.
According to the Washington Post, the number of 3-D home tours created on Zillow went up 326 percent on March 20.
“The work-around is virtual tours and other technological opportunities,” McFadden said. “But, in light of the fact that as a society we accept buying things online comfortably, homes are not one of them.
“People still want to see and feel and touch a home. That’s the last hurdle that we can’t get over. Maybe that shifts if this goes on for a longer period of time. But as of now, a virtual showing doesn’t let someone feel if a house is their future home.”
Transactions that were able to begin the contracting phase prior to the state shutdown are still able to take place, McFadden said. Appraisals and inspections have stopped with the exception of for homes that went under contract prior to March 19. Title searches, mortgage approvals, closings – are all still happening, although some are occurring in a non-traditional fashion.
“It feels weird, but some of these transactions are taking place in parking lots,” McFadden said. “I am appreciative that mortgage companies, title companies, buyers and sellers are willing to do some strange things to get it done.”
McFadden detailed an account of everyone meeting in a parking lot and one person at a time getting out of their car, going to a neutral location, reading and signing documents, and leaving checks, and then walking back to their car and letting the next person come out to the location to do their part in the transaction and allow it all to take place while maintaining social distancing.
Notarizing documents has become more onerous as well without the ability to have face-to-face meetings. However, many states are enacting legislation to allow either temporary or permanent remote online notarization so that documents can be effectively notarized.
According to Lexology, as of March 29, there were 23 states that had enacted remote online notary (RON) laws, 17 of which are currently in effect. A number of other states have introduced bills, which have not yet been approved or signed into law, that would enact RON statutes. If these bills are approved, they still may require additional executive orders or an emergency guidance in order to become effective on an expedited basis.
Given the recent executive orders and emergency guidance issued in a number of states, additional states may follow suit, so this information is likely to change frequently but at least the process is still happening, even if it is slower, and with different ways of proving identity then previous protocols.
And other aspects of a property transaction are still taking place, albeit in modified fashions.
Home inspectors are still operating but doing so under the agreement that they inspect alone – with no buyer, seller or agent present. The inspectors will video the process continuously while taking notes. They will then send the video to the buyer and walk them through it in segments and answer any questions that way.
“We’ve been fortunate that one of the things under the inspection category – we have a use of occupancy inspection in our area, where every town has its own rules,” McFadden said. “Every town has a different checklist, but a number of towns have modified their protocol by doing an exterior inspection only and then having the seller sign an affidavit for the requirements needed on the inside of the house.”
Yet, while there have been creative ideas to keep business operating in the states where real estate is considered non-essential, the interest in buying or selling a home has almost dried up.
Unlike what Vold is experiencing, McFadden is not getting as many email alerts on his phones in the age of COVID-19.
“We are getting a few, but only a few,” he said. “I probably get an email a day – which is down from between 20-30 a day. It was building up to be an unbelievable spring because of the mild winter we had, and it just came to a standstill three weeks ago.”
According to Vold, despite the fact that it’s business as usual in the middle of the country, there are extreme measures being taken.
Even though she has been showing houses, there are precautions such as wearing gloves, booties and masks as tours are being given.
Some agents have even turned to virtual tours by using their phones to guide potential buyers through homes and showing every crack and crevice to the buyer.
And at closing, things are especially sanitized. Buyers and sellers are often being kept in separate rooms. A lot of documents are being digitally signed in advance of the closing and, for those that are signed in person, new boxes of pens are being offered to each signer.
“My broker is in the office wiping down everything – tables, phones, pens – every time someone leaves the office,” Vold said.
She added that a lot of agents are now being asked to not attend a closing, or to just wait in their car for the closing to be completed.
But Vold said she makes every sale such a personal experience that she wants to be there with her clients when the transaction is finalized.
“I want to be there,” she said. “I’ll wear a mask. I don’t care if I have to dress up in an entire CDC safety suit, I tell my clients I’ll be there every step of the way for them, and that’s what I plan to do.”
Visit our COVID-19 Page for the latest news and information from Home Ownership Matters on COVID-19 and its impact on homeowners, housing and communities across the country.