COVID-19 and What it Means for Real Estate

How Real Estate is Changing to Deal with COVID-19

There’s no denying that the COVID-19 virus is taking its toll on every industry right now, especially the travel and hospitality industries, but as a lot of household purchases have moved to online sales, is the market ready for the same to happen to purchasing a house?

Virtual tours are gaining popularity right now and I think they are a great way to begin the process of house hunting in the current environment and what I assume will be a long standing cultural change for the world.  But is it expected that a buyer should be willing to write an agreement of sale for a house solely based on a virtual tour?  A house is one of the most tactile experiences one can have.  Floors creak, solid wood doors have weight that show quality, basements can be musty, a kitchen bright, a railing loose…

I don’t see in person showings ever going away but I do see professionals and consumers adjusting their expectations to the experience of house shopping.  I believe negotiation strategies will change along the way as well.

What you Should Expect if your going to Buy or Sell Now

Maybe you’re one of the many that were thinking about starting to search for a new house or your first house and have decided it’s still a good time for you.  I personally still think there’s opportunity out there for some and don’t see it as a bad idea to get started, though you should be ready for a slower process.

If you’re a seller, it could be the last best time to get your house sold for a decent price in case the market makes an adjustment in the coming months. Rates are still low so values are holding but if we get a flood of inventory on the market once things begin to normalize, you could be facing stiff competition from your neighbors.

If you are thinking about buying, the idea that values may start lowering could be on your mind.  You may think to wait for the next few months to see if prices adjust and you can get a better deal.  I’m not going to tell you you’re wrong but I can say that real estate markets don’t adjust like stocks do.  If you’re looking for the adjustment, then it could take a year or more and right now you’ll be one of the few out there browsing listings. The deal you’re looking for could be waiting for you right now with almost no competition.

Process Changes

As a realtor, I’m damn near forbidden by law to do my job of showing homes, attending walk throughs, having meetings and directing staging.  Technically, I’m not allowed to walk someone to a house, unlock the door and go in with them BUT I am allowed to open the door and let them walk through on their own.  Technicality but one that stays within the confines that has been put forth.

First of all, if the house is occupied, you need special permission from the seller to show it at all and they cannot be there.  Also, if you like what you’re seeing and are considering an offer, go back outside and let your realtor walk through themselves with what you want them to pay special attention to.  Showings will go longer but you won’t be missing out on any opportunities either.

If you do go under contract on a house, plan on a long closing and make sure to ask for longer contingency periods.  It is taking longer to do inspections and get radon results (if you can even get it done) so upping the standard 10 days to 14+ is probably a good idea.  Delays are common right now so prepare yourself for a few.

Did you know that PAR (Pennsylvania Association of Realtors) Already Released a COVID-19 Addendum?

Many found themselves newly under contract on a house and excited to be first time home owners soon, only to find that everything had come to a grinding halt, but inspections still needed to happen, appraisals, mortgage commitments, title searches, closing dates and more all by contractual dates.  Pandemics aren’t exactly taken into consideration on the AOS (agreement of sale).

An addendum was released to the Realtor Association to automatically extend all dates by a standard of 30 days, IF delays could be specifically contributed to the COVID pandemic.  From what I’m seeing, title companies are what have been impacted by delays the most.  With offices in the City closed, getting information about liens, payoffs, violations and deeds has been quite challenging.

I’m also seeing delays on a new construction purchase I’m in right now.  The seller is unable to get the tax abatement approved as the OPA is closed and they need to show proof of a water lien that was paid.  This is an unknown amount of time on a delay as we have no say in when the city offices will open again.  I’m sure a multitude of other delays are being experienced by others right now as well.

The one thing to remember is that both parties want the same thing, a sold house.  Sometimes we can get into the back and forth and it starts to feel like an “us vs them” type of conflict but keeping in mind that everyone is working towards the same goal, during this unprecedented and confusing time, will keep expectations where they need to be.

Closing Day

If you’ve managed to make it this far then congratulations! Hopefully it hasn’t been too stressful or at least any more than normal.  Normally, there’s a lot of people sitting in a conference room signing paperwork.  Your agent is there, sometimes the seller and their agent are there, a mortgage rep is there and finally a title agent is there.  As you can imagine, this breaks a lot of rules right now, so you can expect at most for there to be you and the title agent… that’s it.  No celebratory pictures with your agent handing you the keys and lots of hugs. Just the completion of a successful transaction and a new home to quarantine yourself in.

Moving forward from here

Though I cannot claim to be a seer when it comes to the future, I do feel confident in saying that I don’t see an end to a change in process for a very long time. This pandemic has wounded us culturally and a return to “normal” could be years down the line. Open houses could become an uncomfortable situation for some. Showings in occupied homes are going to be more difficult for the owners and the amount of trust needed. Hand shaking may become a thing of the past…Real estate is a people and relationship business. It is now and it will continue to be in the future. Figuring out how to be the professional that

The rules we put in place for how to conduct business in a safe and professional way, will remain with us for a long time. Virtual showings will become commonplace and video meetings the norm long after we end the shelter-in-place and we all are going to need to adjust. Those that don’t will find themselves frustrated with the “stressful process” that comes with buying a house.

None of this changes the fact that real estate is a people and relationship business and always will be. As a Realtor, I “sell” trust, relatability and information first and foremost. Houses are just the commodity of that transaction. So while the process may remain forever altered, the core of the business will remain the same.

Thinking of selling your home? I’m passionate about helping sellers get the most for their house and hitting their goals!

I service Philadelphia and its surrounding counties such as Montgomery, Delaware, Bucks and Chester counties.  Call/text me at 267-825-1192 or email me at chris@chrishvostal.com.