Real Estate is evolving on a daily basis right now and none of us truly know how the story will end. Believe it or not, there are buyers out there that are still looking for their dream home. Those would be the buyers that are confident with their employment situation and have been able to save for the transaction. At the same time there are many homeowners not being pushed to sell because their lender has automatically deferred their mortgage payments. Still, buyers should not assume that because we are in a pandemic they can automatically lowball a seller. Sellers may be more willing, however, to entertain offers on the lower end. The reality is a buyer won’t know how motivated a seller is until they make an offer. Buyers need to keep in mind that no matter how badly a seller needs to sell they may not want to engage with a buyer who low balls an initial offer.
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.
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.
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. 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.
Ordinarily once an offer is accepted it’s a fairly straight line to closing, these days it’s more like a zig-zag. There are health and safety concerns of appraisers, home inspectors and repair contractors. Buyers need to embrace a longer transaction process by setting the closing date further out than the standard 30 days. By anticipating a delay upfront and writing an extension in the contract the buyers will have more peace of mind in these trying times.
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.
Securing financing may be the biggest challenge right now, so make sure you have a mortgage commitment letter when you make an offer. This is a more detailed document than a pre-approval and, as the name implies, represents a firm commitment from your lender. And many lenders are tightening up their terms and conditions. Minimum credit scores and required cash reserves have risen to new levels, making it difficult for many buyers to qualify.
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.
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.
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 and buyers don’t have to abandon their property search right now.
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.