Without repeating all the worn-out rhetoric about the COVID-19 pandemic, I thought I would share my actual experiences with regard to conducting a real estate practice during the lock-down.
First, let’s be real: we are all learning on the fly and things are changing on a daily basis. Second, anybody who tells you with certainty that they know what is going to happen in the market over the next few months is talking out of their…well, let’s just say they are not being entirely honest or not well-informed. No one really knows. Third, transactions are taking place and there are both motivated buyers and sellers currently in the market.
As I write this, it is a Thursday morning near the end of April. We have been sheltering in place for over a month now and I am setting up showings for buyers this weekend. Here are a few observations: A) There are very few homes on the market; B) Getting sellers to allow a physical showing is exponentially more difficult than before; C) At least from my perspective, buyers seem to have more motivation than sellers (I have no explanation for this). In order to get sellers to agree to a physical showing, these documents must be in their hands days before the showing is to take place:
- The “Coronavirus Property Entry Advisory and Declaration” (PEAD) form, acknowledging all the precautions that must be taken before, during and after the showing
- Proof of funds showing that the buyers have the cash necessary to complete the transaction
- Pre-approval letter from a qualified lender stating the buyer has been vetted and tentatively approved for a loan (if necessary)
- Acknowledgement that the buyers have exhausted all the virtual touring options
Typically, none of these documents are required prior to a showing; most of this doesn’t get communicated until an offer is being put forward. In addition, the buyers’ agent is responsible for ensuring that all parties entering the property are wearing face masks and disposable gloves. What this all means is, the buyers must REALLY want to get in to see that home. That’s good news for both parties and I’m a fan of making buyers put a little more effort into the process. It eliminates much of the frivolous activity that otherwise takes place.
Many of the buyers I have been working with prior to the pandemic are still looking and have increased their online searching, partly because they have more time on their hands and this is something fun to do. Almost universally, their feedback to me is about how few homes are currently offered that fit their criteria. The increase in online searches is validated by Zillow, the largest home-search platform, as their activity is reaching, or has reached, all time highs. To be fair, the clients I’m referring to are people who have not been negatively affected, financially, by the virus.
KEY QUESTIONS: That last part, about people being financially impacted, and the ensuing spike in unemployment are the big wild cards. How many people are going to lose their jobs? Even if they don’t lose their job, will they have a reduction in earnings? How long will they be out of work? How long before the economy picks back up? How much does the stock market affect home buying? What happens when people stop paying their mortgage? What about landlords who can’t collect rents? Will this only impact the low end of the market, as some are suggesting? (Note: This is based on the premise that service employees are the hardest hit and are typically lower-income earners. Personally, I do not subscribe to this theory. I view the real estate market as a percolator: lower end sales enable move up buyers, widening the base of a pyramid. All price ranges will be impacted.). There are a lot of answers we just don’t know at this point.
With all that said, here are a few of my take-aways:
SELLERS: If you have been wanting to sell, it appears there is still more demand than there is supply to satisfy the demand. However, now more than ever, your home has to present itself in a superior manner. That means staging, updating, de-cluttering, and investing in high-end media. By high-end media, it means professional photography, virtual tours, copies of floor plans, drone photography, neighborhood pictures, etc. The more you can virtually show and the better your home shows online, the better your results will be. Second, fair pricing is more important than ever. Price your home to sell according to the SOLD comps, not what other people may be asking. Take the advice of your real estate professional to set the price at about where you expect it to sell. It is not a time to “test the market.” Finally, be flexible, understanding and easy to deal with during the marketing phase. Make it as easy as possible for potential buyers to make a strong assessment about your home without too much of a hassle. Buyers always judge how the sellers are going to behave in a transaction by how they are treated prior to making an offer.
BUYERS: Patience if the word of the day. You are going to be asked to jump through a lot of hoops that didn’t exist before. Be prepared. Know that the sellers have a lot of work to do to prepare a home to be shown. There are fewer homes on the market, so you may have to wait until the right one appears. Ask your agent if there are recently expired listings that didn’t sell that might fit your needs. Get your ducks in a row before looking to demonstrate your strength as a buyer. This means reviewing (improving?) your credit score (if you’re getting a loan), having proof of funds available, working with a qualified lender to get you pre-approved, not making any other major purchases (e.g. new car). Try to narrow your search down to a specific geography, town, school district, house of worship or community.
Documenting the attributes of the home that are most important to you, ranking them in order of importance. For example, you must have at least four bedrooms, a pool, and a three car-garage – whatever you value most. This will be very helpful in refining your search and is hugely beneficial to your agent. When you do find the “right” one, don’t insult the sellers with a low-ball offer; this sets the negotiations off on the wrong foot.
CONCLUSION: So, is now a good time to sell or buy? The answer is yes to both, but only if you are serious.
Yes, it is a good time to sell because there are still a lot of qualified and motivated buyers looking, with too-few options for them. Many of whom would probably be interested in your property.
Yes, it is a good time to buy, because so many of your competitors have dropped out of the hunt and there are fewer qualified buyers making offers.
As always, please call me to discuss anything having to do with real estate. I get great joy out of providing whatever assistance I can.