As the novel coronavirus (COVID-19) continues to keep Californians at home, the housing market is rapidly feeling the impacts of a shuttered client base.
Governor Newsom recently ordered individuals to shelter-in-place, putting a halt to all non-essential activities outside the home. Real estate showings are not considered an essential activity. Therefore, homebuyers and their agents are unable to tour homes.
However, even in the face of a global pandemic, the need to buy and sell continues.
Brokerages with practice giving virtual tours and assisting remote clients are quickly showing the upper hand. For example, Redfin, a national real estate brokerage, recently reported a 500% jump in virtual showing requests over the course of a single week.
For real estate brokerages new to conducting business online or virtually, Redfin has shared a helpful video with tips and advice for how to do so safely and effectively.
Why spill the tea on their trade secrets? Redfin leaders point out that — except for the rare cases when both buyer and seller are represented by Redfin — they are working with brokers who are less familiar with remote policies. To ensure everyone’s clients are taken care of and transactions close smoothly during this turbulent time of social distancing and sheltering in place, everyone needs to be on the same page, even when they can’t be in the same room.
Best practices for virtual tours and closings
While more difficult, homebuying and selling may still continue in the coming weeks of COVID-19 isolation. County recorders are still recording home sales, according to the Sacramento Bee. Other industry professionals can complete their work remotely, including title companies, mortgage lenders and even notaries.
Appraisals have also gone remote. Through May 17, 2020, Fannie Mae and Freddie Mac are accepting exterior and desktop appraisals in lieu of traditional in-person appraisals.
But how to induce homebuyers to purchase without actually setting foot on the property?
Homebuyers have been purchasing properties sight-unseen for years now, relying on listing photos and virtual tours, especially in competitive markets where listings receive multiple offers within hours of going live. The difference now is that all offers will need to be sight-unseen until the shelter-in-place order is lifted.
When homebuyers and sellers agree to specific repairs or improvements in their offer, sellers will find more success with including a credit at closing so the buyer can perform the repair themselves. This forgoes the need for the seller to have workers at their home and for the buyer to inspect the repair before closing.
At the time of this writing, home inspectors are not considered essential employees. Thus, homebuyers requiring a home inspection — every homebuyer reliant on mortgage financing — are out of luck. It is possible the state may allow home inspections when the shelter-in-place order stretches on and the economic impacts of dramatically slowing home sales are felt.
On the other hand, when the inspection needs government approval, some city and county inspectors are still working to inspect properties, when conditions are sanitary and safe for inspectors. Depending on where the property is located, inspectors ensuring building code compliance may or may not be allowed to currently practice in your area.
Creative brokers and agents will weather the downturn by going virtual when able, padding their income with other opportunities, getting ahead on required continuing education and preparing to assist the many buyers and sellers who are eagerly awaiting the shelter-in-place order to be lifted so they can resume their plans.
The rules for listing and buying during the pandemic are changing on a daily basis as the crisis evolves. Stay tuned to us for details as they continue to emerge.