Initially, buyers were fleeing the real estate market when COVID-19 first hit but that is no longer the case. In fact, real estate markets around the country have rebounded quickly.
Even the rental market has continued to rise. For example, the rental market in Dallas has continued to explode, like the virus doesn't even exist. Other areas around the country have continued to thrive as well. Much of this is attributable to the continued low inventory growth.
As states begin to reopen, you can anticipate an unconventional experience. To help you prepare, here are five ways you can successfully navigate the buying process.
Expect a Virtual Experience
Pre-pandemic, you could tour homes in-person with multiple family members. However, real estate agents have since had to adapt the showing experience in accordance with social distancing regulations. To keep both buyers and sellers safe, many Realtors have suspended open houses and transitioned to virtual tours.
Though this technology is not new, live showings and 3D home tours have become instrumental during the current pandemic. They allow realtors to give prospective buyers a clear idea of the space and answer questions in real-time. You can also view a property’s floor plan and specs online, so you know what to expect in person.
If, before closing, you’re able to tour the property in-person, you’ll also have the opportunity to rescind your offer should you find any major issues.
If you’re moving to a city where shelter-in-place orders are less stringent, you may be able to tour homes in-person. Even if this is the case, local ordinances will likely require you to limit the number of visitors and wear gloves, masks, or booties over your shoes. Virtual tours can at least get you in the door so to speak without actually visiting.
Factor in Economic Concerns
During uncertain times, you might feel reluctant to invest in a new home. However, there are some financial benefits to buying now. Historically low mortgage rates provide a great opportunity for you to secure a loan with more manageable payments. However, it’s important to first determine how much house you can afford by calculating your monthly payments mortgage.
If you are concerned about a job or income security, or you want to be conservative with your spending, avoid looking at homes at the top of your price range. Instead, opt for ones that are considerably under-budget to ensure you have enough money to counteroffer, or to put toward closing costs, unexpected repairs, and your emergency fund.
Since buying a home is a major investment, you may also want to consider options like government-backed FHA loans, which have more lax requirements and only need a down payment of 3.5%. Opting for a low-down-payment mortgage can make home-buying more feasible and help you direct more of your money toward emergency savings.
You might even consider getting a down payment gift from a family member. You can use that money you saved on other housing expenditures.
Amend Purchase Agreements
If you’re preparing to close on a home, consider adding a coronavirus addendum to your purchase agreement. An addendum extends the closing date, addresses any possible issues as a result of the pandemic, and outlines contingencies or action plans for each step of the closing process.
It should also address circumstances like government-declared emergencies, unexpected illnesses, travel restrictions, and mandatory closures, which can all delay the closing process.
Addressing the pandemic in your purchase agreement protects both you and the seller should something happen. However, a crisis-related addendum is not required.
Your realtor may advise that both parties address unexpected events on a case-by-case basis, or you might just come to a mutual agreement to extend the closing date.
Choose the Right Real Estate Agent
Rather than settling on the first agent, you come across, take time to research your options. Compare reviews of local agents and ask for referrals from family and friends to ensure they have a deep understanding of the local market and your needs.
A qualified agent will have your best interest in mind and help direct your decision making. They may advise you on whether or not buying a home would be a smart financial decision, as well as which neighborhoods to consider moving to. When choosing an agent, make sure you have a good rapport with them. You should feel comfortable sharing your goals and concerns as they guide you through the process.
The right agent will also take proper precautions to ensure both their own health and yours. That means they may conduct meetings with you via phone or video chat, or decline requests for in-person viewings if they feel it would be a health risk.
Some people have been turning to lower-fee commission models if they are available. There are certainly pros and cons with these types of companies so make sure you do your due diligence. Sometimes you really get what you pay for. Above all else look for someone with a solid track record of performing in good times or bad. Nothing beats a track record of success.
Prepare For Competition
The current pandemic has caused many sellers to delay putting their homes on the market. Though the economy is beginning to recover, many prospective buyers are coming face-to-face with a housing shortage. As many homes will be priced well and in move-in condition, it’s best to prepare for stiff competition.
Obtaining mortgage pre-approval, offering all-cash, or fronting a larger down payment can help make you more attractive to sellers. In addition, you should be ready to put offers on multiple homes and submit counteroffers in the case of a bidding war.
The bottom line is listings won’t wait for you, so you will have to act fast. To prepare for the tight market, you should compile your financial documents, conduct research on potential properties and their surrounding neighborhoods, secure a strong mortgage pre-approval, and submit complete offers. Taking these steps ahead of time will increase your chances of closing on a house.
So many buyers are surprised to find out just how resilient the real estate market has been. Lots of consumers think "pandemic" and automatically assume real estate must be slow-slow-slow. Far from it!
Most real estate agents are reporting vibrant markets where homes are selling very quickly.
With more people applying for mortgages and refinancing, many lenders are taking longer to approve. In addition to lender approval, home inspections and appraisals might also be pushed back due to shelter-in-place orders. Getting a mortgage during the pandemic has been a bit different in some markets.
That being said, you should understand that delays in closing are likely inevitable. You should speak to your moving company in advance and make sure they have some flexibility with dates. A common moving mistake is waiting until the last minute.
The good news is some lenders and real estate professionals have found ways to expedite the process, even from a safe distance. For instance, some cities allow documents to be signed electronically while others offer curbside closing services. Be sure to ask your agent about the appropriate protocol for closing on a new home.
Buying and selling during a pandemic is a new challenge for everyone. However, by working closely with your Realtor and anticipating potential roadblocks, you can navigate the buying process with ease.
Keep an open dialog with everyone involved in the transaction including your mortgage broker, real estate agent, and attorney if you have one.
Final Thoughts on Buying During a Pandemic
Buying a home during times of uncertainty is always going to be troubling for some folks. Everyone wants to feel good about their finances when they are going to be making such a significant purchase. The worst can go through people's minds. Will I have a job next week? Are my finances going to suffer? Will the stock market continue to take a nosedive.
These are all valid concerns. Sometimes there is no choice when you have to buy a home. Put your best foot forward in times like these. That's all you can do. Hopefully, the information presented on what has been going on with real estate has been helpful.
About the author: The above article on navigating the home buying process during times of uncertainty was written by Victoria Araj. Victoria is a professional with over 14 years of industry experience. From real estate to banking, she has knowledge covering a wide range of topics.