In a matter of days, life as we know it has been turned upside down. The only normal is a new one. The experience of living through 9/11 and the economic crash of 2008 has taught us just how quickly we abandon established routines in exchange for new ones.
At one point in time, we could have never imagined the day where we had to show photo ID and boarding passes before going to our boarding gate — let alone stripping down to go through metal detectors. The acronym TSA was alphabet soup.
During the financial crisis, watching long-time financial institutions crumble in the blink of an eye was inconceivable. We witnessed the house of cards coming down.
When I was getting my Florida broker’s license in 2006, my instructor was very clear about what was coming. Foreclosures — and lots of them. He was also a real estate auctioneer and broke into full-on auction voice and lingo as he described the blocks of properties that would likely hit the market as a “real estate-owned property.”
The idea of the real estate market crashing sounded so far-flung to this relatively newly minted group of agents. It sounded like talk from the 1980s and the Great Recession. The words “short sale” weren’t even mentioned, and all of us in that room would’ve been clueless as to what that was, too.
My instructor aptly predicted that we would come across people we had sold homes to in foreclosure and that we would likely recognize the names of mortgage lenders, appraisers and “investors” going to jail, as cases of mortgage fraud were starting to mount.
So here we are. A new normal is creating itself once again. Hand sanitizers, disinfecting wipes, rubber gloves, masks, social distancing, hunkering down at home and an economy in turmoil.
If your clients are in the midst of trying to buy or sell a home, this is beyond an unsettling time — not only for them, but for all involved in the entire real estate process end-to-end. This means agents, lenders, title and escrow companies, attorney’s offices, inspectors, movers and everyone else in between.
1. The buying and selling landscape has changed
Buyers might feel that sellers and agents should be rolling out the red carpet for them to look at homes. Please understand that this process might not be as instant as it was last week or even two days ago.
While just about every real estate company and builder is putting preventative procedures in place, please know that showings involve the risk of potential exposure to multiple other parties, as well as to the properties you’re seeing and those who live there.
Not every seller or occupant may be comfortable with strangers going into their home. Your exposure becomes their exposure. You might be asked to remove shoes and wear booties, leave unnecessary items outside the front door, use hand sanitizer and anti-bacterial wipes, and refrain from touching anything in a private residence during a showing.
Buyers might also be asked to keep the viewing time to a minimum — 15 minutes versus an hour spent sitting on the couch or standing around the kitchen island and envisioning their lives there.
While buyers might expect instant gratification with access to properties, patience is also a huge virtue for any seller trying to sell right now. We’re early on into the quarantine process; we’re in unchartered waters when it comes to knowing what the pace of showing activity will be.
That activity (or lack thereof) will be different for every seller, depending on price range, area and the level of risk where the property is located. Just because there haven’t been any showings in two weeks doesn’t mean there aren’t potential buyers for the home.
The good news? With everyone spending loads of time at home — most likely in front of a computer — anyone who’s in the market to buy a home will be searching online. Having a video posted with the listing will be key to generating a lot of interest on the property, as well as the ability to share that across various social channels. It’s possible to get an offer based on the video alone.
It just happened on a property I had listed, and it was from a legitimate, serious buyer. This is the second time in six months that I’ve had that happen. (The last time was on the verge of yet another hurricane headed toward Florida).
The power of video really stands out in times of stress, especially when physically seeing a property might not be possible. If the property is empty, hosting virtual open houses are also a great way to invite potential buyers without physical interaction.
If sellers are serious about selling, stay the course. With interest rates at an all-time low, there are buyers who will absolutely be taking advantage of favorable conditions to leverage their buying power. While it might seem like a desert as far as buyer traffic goes, once COVID-19 starts to wane, showing activity could bounce back with force.
2. The transaction will likely be socially distanced
Agents will likely ask buyers to take their own car to meet at showings. If buyers are coming from out of town, encourage them to rent a car for their protection and the protection of their families (and your safety, too!)
If you thought being mashed together in an airplane was bad, multiple people in one vehicle is much too close for comfort in times like this.
The National Association of Realtor (NAR) guidelines have permitted agents to ask buyers and prospects about travel history and potential exposure to the coronavirus. The guidelines also permit asking if clients or anyone they’ve been with is sick or has a fever.
Now is the time to be transparent. Explain to clients that they shouldn’t shrug it off or take offense if they’re being asked these questions by anyone involved in setting up a showing appointment — whether it’s their assistant, the listing agent or their brokerage. Under these circumstances, a seller has the right to understand the scenario of potential visits to their home.
Open house events have largely been prohibited and severely frowned upon due to shelter-in-place orders in several cities, counties and states. Where allowed, open houses are by-appointment-only and occur only after an agent has gone through a series of qualifying questions with the buyer prospect.
Agents are simply not in a position to let somebody, anybody or everybody in a home for the sake thereof right now. This doesn’t mean they don’t want to sell the home. It simply means they have to be responsible about how they handle it.
While no one likes the idea of lost income, the idea of losing a life is far worse than any economic impact. If agents meet clients at a home, they will be practicing social distancing. They might even have the home open for you to view while they stay outside. It might be best to engage in follow-up conversations via phone after the showing ends.
Buyers should understand that they will most likely not be able to meet with their agent at their real estate office and might need to agree upon a mutually agreeable location outdoors.
With so many local coffee shops and restaurants closed (except for take-out orders), finding a place where everyone can keep a safe distance might be challenging. Phone and video will be your best friend in times like this.
Sellers might be frustrated at a sudden drop in activity, and demand that their agent be “doing more” in the form of lavish spending on ads or other kinds of promotion — print, digital, mailings or other activities that you think will sell the house.
Please understand that open houses and broker caravan types of events are not being encouraged in this type of environment. Not to mention, due to restrictions imposed by state and local governments, some real estate companies are outright prohibiting them for the safety of all involved.
The potential for liability exists, and it might not be long before we learn of COVID-19-related lawsuits that attempt to pin cause for exposure on a particular series of places or interactions that a victim had.
An open house is ripe for a situation like that, and the reality is that there are always ambulance-chasing type of attorneys looking for the next round of lawsuits they can attempt to make money from in a distressed economy.
If an agent is exposed in the course of showing a client’s home or hosting open houses, that will be of no benefit to that seller. Agents will not only jeopardize themselves, but also their families and their office, as well as the sellers, their family and their home.
Clients should be considerate of their agent. They need to understand that real estate could be their agent’s only source of income, and the only way they can support themselves and their family. They are in one of the most difficult professions from a compensation perspective even under the best of economic conditions.
Agents only get paid if a transaction closes. That’s it and nothing more. There’s no office subsidy for your agent’s gas, signage, marketing materials, broker open events and everything else.
The coronavirus pandemic is likely going to prolong the real estate cycle, and many agents could go without closings for months. Discuss with your clients if anything extra marketing-wise makes sense during this time. Consider asking clients to assist with paying for the costs of certain things.
While you can shout a property from the mountaintops 50 ways from Sunday, yelling louder doesn’t necessarily incentivize people to act when uncertainty is the underlying theme. With movement restricted throughout the country, until people are able to roam as they please, it might not make sense to launch any new initiatives.
3. Now is not the time to try to take advantage
Buyers might be tempted to throw out multiple low-ball offers at sellers to see what will stick. Buyers might feel as if they are entitled to a deal during these unusual circumstances. Stop.
While they certainly can negotiate, trying to rub salt in the wound of what’s already a trying time will not be appreciated or celebrated. Don’t approach an offer with the intention of playing to a seller’s vulnerabilities or an overblown sense of despair in the market.
Everyone is in unchartered territory, and this is an uncertain time on many levels. No one is exempt. Consider making a fair offer. You might be surprised to find that you will get further with a seller that way, versus starting ridiculously low and asking for pie-in-the-sky concessions.
It could be that the seller responds in a pleasantly negotiable and flexible fashion, perhaps a bit more than they normally would. Buyers could get a reasonable discount from the asking price by taking a more level-headed and respectful approach instead of trying to squeeze blood out of a turnip.
I also believe the karma you put out there is the karma that could come back to you. Buyers will be sellers some day, and you never know what kind of economic situation they could find themselves in.
They also don’t know how this economy could affect their life long after the closing. They might have money in the bank and a secure job now, but if this pandemic has shown us anything, it’s that every day is a gift. What we have today might not be what we have tomorrow, next month or next year.
4. Delays will inevitably happen
Right now, life isn’t going according to anyone’s plan. Major life events such as graduations, anniversary parties, showers and weddings are being postponed or cancelled. Sadly, even celebrations of life due to a loved one’s passing can’t be held.
The same is likely for a real estate transaction. Whether a buyer or a seller, help them understand that there may be delays with all facets of the transaction process as human interaction is compromised over the next few weeks or months. They’ll have to plan accordingly.
Inspections, appraisals, loan processing and underwriting, as well as issuing the clear to close and getting the package from the lender to the title company, will be challenging during this time.
Inspectors whose work can be potentially hazardous in the best of times have to take special precautions now like never before. Their job entails physically touching and testing numerous components in a home, many of which could be germ-infested. Appraisers also face a similar risk by having to physically enter numerous properties to do their job.
A closing date is just that — a date. And while everyone can do their best to make that date, in this situation, we’re dealing with circumstances beyond anyone’s control.
Buyers should allow themselves plenty of float time if they’re terminating a lease. It might be better to plan for an extra month or two to vacate their rental versus cutting themselves short. There could also be challenges encountered with hiring moving crews during this time.
Also, buyers should be considerate of a seller’s request to lease back for a certain amount of days after closing. Before sellers try to move mountains to get their house packed up and vacate, they will want the comfort of being able to close on the home and have their proceeds securely in their bank account.
Buyers and sellers need to be flexible and understanding with each other regarding obstacles out of their control during this time. To that end, addendums that address delays in transactions due to the coronavirus have been released for use by various state real estate associations to help manage delays that might arise, as well as the need to cancel the transaction and etc.
5. Adjust your expectations
We’re living in unpredictable times. No one has all the answers — and that includes real estate agents. While people are doing their best to obtain information and updates from their company’s real estate leadership, local, state and national Realtor associations, along with national, state and local officials, this situation is rapidly changing. What happens today might be drastically different tomorrow.
Just looking back at the past week and a half or so has changed the entire trajectory of our lives. When two NBA players tested positive for COVID-19, that lead to all major sports being cancelled and the discovery of a host of NBA players that have since tested positive for the virus.
6. Accept that you might not have all the answers
This one is tough. It can be easy to panic at the thought of the unknown. Will things get better after mid-April when many of those “temporary” closures and lockdowns are supposed to end? Those are arbitrary dates and deadlines, and we don’t know if they will be extended.
Real estate is a business based on results and outcomes. Explain to buyers and sellers that agents use data to predict the future. We educate sellers that their home sale should take approximately x amount of days (or months) based on sales of other homes in the neighborhood. We also inform them that their property should sell around x percent of their asking price, based on what has happened over the last 60, 90, 120 days, etc.
Achieving those same results might not be possible now or in the next few months, and everything is up for grabs. Whether you’re buying or selling, it’s important to stay flexible and focus on the process instead of the outcome.
Although outcomes are uncertain at this time, there are processes we can control. This means staying the course and not reacting in a knee-jerk manner to every headline or “breaking news” update. It’s all breaking news, no matter the channel, designed to get mesmerizing attention 24/7.
While things might appear to be doom and gloom right now, it could be a dramatically different and positive picture a few weeks from now. Sellers don’t have to suddenly pull their homes off the market. Buyers don’t have to abandon their property search right now.
If clients are in a position to do so, they can put the current mortgage market to work for them. Never before have buyers been able to leverage their purchasing power, and for sellers, this same purchasing power may enable a buyer who is able to get into their first home, a move up property or their ultimate luxury dream home.
No matter what, it’s important to remember that everyone has to live somewhere. Our homes have never been more important to us than right now. They are a place of solace, respite, work and the ultimate shelter from the storm — no matter what kind of storm that is.
At the end of the day, our home is the one sacred place where we can work through our deepest fears and challenges, rejoice in the happiest of times and simply relax and be who we are without fear of judgement or criticism.