Welcome to another unsolicited COVID-19 update. This is new to all of us. We're all trying to make sense of what's happening on a global scale, much less what's going on in our local real estate market. I'm only going to touch on the latter, because there's smarter people than me working on the bigger picture.
This isn't a crystal ball prediction of where I see the market may be going, though I'll cover that in a different blog post. This is a nuts and bolts walkthrough of what I see happening for clients who HAVE to buy and sell right now. And I'll preface this whole thing with the caveat that I'm of the mindset that if you don't HAVE to be buying and selling real estate right now (literally right now, at the beginning of an unprecedented global pandemic that noone is really sure what the length and severity may be), then you should probably sit back and wait and see what's happening.
Is this counterproductive to my ability to make money? Of course. Do I think everyone should panic and put their house up for sale to get in front of a global economic calamity? Nope. Otherwise you'd see a for sale sign on my front lawn that I'd be Lysol-ing every day.
Regardless, there are Buyers and Sellers out there that will have to make a move.
Maybe you bought firm because the market dictated that and a strong Seller's market in place at the time had you thinking you'd have no issue unloading your property for over list price. Maybe you already sold your property and need to find a place for your family to live. Maybe you were given notice at your apartment that a member of the owner's family was moving in and you thought it was time to enter the market. Maybe you've been relocated for work and securing a home is a condition of employment.
Valid reasons all, and the reason that Real Estate has been deemed an essential service, on top of the fact that we're already managing closings for contracts that were written pre-Covid. But it's not business as usual. Here's my (unsolicited) advice for Sellers and Buyers:
SELLERS:
1. DON'T SCREW AROUND WITH YOUR PRICE. Price your property fairly and sharply. Don't go under what it's worth, and don't go OVER what it's worth, certainly. The days of putting a low price tag in order to drive competitive bids will soon be at an end. If you get one offer, will you take it? No? Then price it for what you'd accept. And for the love of whatever deity it is you subscribe to, please don't over-list by $25,000-50,000 to "have room to negotiate down." It's hard to negotiate when noone is even looking.
2. HAVE A PLAN. Your real estate professional should have a plan in place. And not just a plan A, but a plan B, C, D and the rest of the alphabet if necessary. If you can't adapt in a changing market, you're doomed to stagnate.
3. BE VIRTUAL AS MUCH AS POSSIBLE. For your health and the health of your family and to try and curb the spread as much as we can, properties should be shown online as much as possible. This means professional photos (if your agent starts clicking snaps with their flip phone, don't sign the contract); 3D walkthroughs and floor plans for virtual tours; and elaborate video walkthroughs. Have a pre-listing inspection done to provide peace of mind to a potential buyer (and also limit the amount of people in your home, and control who that person is). Ensure that the companies your Realtor is using to capture these valuable tools have a Covid-19 policy in place. We have one company we use for these, and they're taking things as seriously as we are.
4. REAL ESTATE IS STILL A PHYSICAL ASSET. And as much as we want to move to a virtual environment, there will still need to eventually be someone in your home physically. There are steps to mitigate transmission. Physical open houses have been banned, and you don't want tire -kickers coming through anyway. You could accept offers conditional on someone viewing the property, limiting the amount of people coming through. Only people who are essential to the transaction should be present, and whenever possible children should be left at home. Physical distancing should be respected. Leave all lights on and doors opened when people are in your home so that lightswitches don't have to be touched. Give all surfaces a wipe when you return home with a disinfectant. Home inspectors are implementing rules where they will be alone in the property while inspecting to mitigate their risk, and going over the report virtually with the Buyers afterward. In a perfect world, you would move out during the period when the property is for sale until you have a firm contract, but this isn't always feasible. Make sure your Realtor has a plan in place.
5. YOUR HOUSE IS SOLD. CONGRATULATIONS, NOW LET'S CROSS OUR FINGERS AND HOPE IT CLOSES. Nope. There are steps to take during offer negotiations to ensure that the prospective buyers of your home will be able to close when they say they will for the amount that they say they will pay. This isn't the time to be delicate when negotiating terms. I want to see proof of funds. I want an appraisal done DURING the conditional period, not a week before the property is to close. I want a higher deposit than what they're offering. Constant communication with co-operating Realtors and Lawyers is paramount, right up until closing. I'm greedy when it comes to protecting my Sellers' best interests, and while other properties aren't closing left and right, if you take the steps necessary to protect yourself, you can be confident that your transaction will complete on time with little to no complication.
Put a plan in place and you'll get through this with your health intact and sound knowledge that you didn't make this problem any worse than you had to.
BUYERS:
1. PLAN, PLAN, PLAN. It's no different than Selling in this market. You need to be just as strategic. This means culling your list to ensure you're not out looking at property just for the sake of looking. Use your time online and with the help of your Realtor to pare down what location you want to be in, what style of home best suits you (size/amenities/vintage) and what you're willing to negotiate on in terms of your wants and needs.
2. ENSURE YOU HAVE YOUR DUCKS IN A ROW. Quack quack - get your financing right. There are lenders who are scrambling and hedging their bets on a potential market correction. Rates are simultaneously falling and rising as banks mitigate risk. A firm financial approval (RBC is one of the only options I know for a true firm approval) will put you in the best position to offer (and close) on your transaction confidently.
3. FINDING YOUR PROPERTY. As mentioned above, take advantage of the virtual tools at our disposal. Give extra weight to properties where Sellers have done some of the heavy lifting for you to protect everyone's health. Pour over those virtual tours and video walkthroughs. If the Sellers have provided a pre-listing inspection, go over it with a fine tooth comb and know the issues that come along with the property and price it accordingly in your offer. Make offers conditional on viewing the property in person at a future time when deemed safe to do so. When you do physically attend a property you decide on, ensure you're doing the things established by our public health experts to protect yourself and everyone else. Physical distancing, constant handwashing, and be respectful to not touch anything in someone else's space.
4. PURCHASING YOUR PROPERTY. Prepare your offer with your Realtor virtually using an e-signature program, but in a changing market where things are a little less certain than they were even a few short weeks ago, you can include *gasp* CONDITIONS. Imagine being able to secure a property and THEN being able to do your due diligence. What a world that existed right up until 2017. Most everything can be done digitally to ensure that all your T's are crossed and I's dotted so that you'll be ready to close on time with as few, if any, complications as possible. I'll touch on some general conditions here and how to mitigate your risk:
- Financing. If you have a financing condition, which you should if you're applying for a mortgage, ask questions of your lender of how to get a FULL approval. Sometimes you'll get a partial approval, with conditions that will need to be met prior to closing. Ask your lender if you can have those conditions met within your conditional period. If they require an appraisal, ENSURE THAT YOU ASK FOR YOUR APPRAISAL WITHIN YOUR CONDITIONAL PERIOD. In hot markets where things change quickly, often banks won't send their appraiser through until a week or two before closing, and they may not see the value the same as you did when you bought it a couple of months prior. That's trouble. Appraisals are being done with an appraiser on the exterior of the home with the homeowner inside on video chat, or just using photos and floor plans from MLS. Get them done, or don't consider your financing fully approved.
- Inspection. Inspectors are starting to perform their dutie with noone else present at the time of inspection, aside from the Realtor who is there to simply open the door and allow them in to do their work. Sellers should have all lights on and doors open so that the inspector doesn't have to touch any more than they have to inside the home. The inspector will then go over the report with you virtually after the fact and describe any deficiencies found in the home.
5. CLOSING YOUR PROPERTY. Thankfully, the Law Society acted swiftly to ensure that identity verification and notarization could be done digitally at the outset of this pandemic. This will allow Buyers to meet with their lawyers virtually to minimize contact. Keys are being left in lockboxes to facilitate closings when funds are transferred and the properties are deemed closed. It's a brave new world out here.
These are general broadstrokes, obviously, and there are invariably differences with every real estate transaction. They're like snowflakes, except with higher liability exposure. Ensure your Realtor covers any questions you might have, and you'll be just fine.
If you should have any questions for me, I can be reached at srobert@trilliumwest.com and we can set up a time to talk. I'm literally not going anywhere for the foreseeable future.
Stay healthy, wash your hands and take care of each other.