You had plans to sell your Palm Springs area home when the coronavirus hit the U.S. like a ton of bricks. Now, you’re wrestling with a really tough decision about whether to move forward — and when. Some would-be sellers are frozen in place, hedging their bets and hoping the situation improves in the coming months. But not every seller has the luxury to take a wait-and-see approach without making serious trade-offs. Some may be driven by a job relocation, a growing family, or another distinct life event. Although selling a home in 2020 and beyond is going to look a lot different than it used to, people haven’t stopped selling houses altogether. And considering that the lingering effects of the virus could last into 2021 and beyond, we can’t expect an “all clear” signal anytime soon for putting out that for-sale sign. Here’s what top agents in the field are seeing in their market, what they believe sellers can expect, and how they’re advising homeowners who are grappling with what to do next.
‘Real estate is sticky:’ Act before property values drop
“If I’m a seller and I know that I’m going to sell guaranteed in the next two years, I am making sure that I get my home sold — because real estate is sticky,” says Nick Shivers, a top real estate agent in Portland, Oregon. “It’s not like the stock market that goes up at 1,200 points one day and down 2,000 the next day. It takes a while for us to see the depreciation aspect, and it takes a while to get it going on the appreciation side again.” The data supports Shivers’ point: You might assume that the coronavirus would impact all markets as swiftly as it did stocks. But housing is more stable, at least in the short term. Even after COVID-19, a severe supply shortage has propped up home prices for the time being. In March, the number of homes for sale declined 15.7% compared to March 2019, while the national median listing price grew 3.8%. According to HomeLight’s own Flash Poll of top agents across the country, as of April 15, 75% of agents report that home prices are holding steady in their market. There’s definitely something to be said for now being a unique — and potentially fleeting — window of opportunity for sellers. “I’ve been tracking our own home showings to see what’s going to happen; I really expected to see a significant slowdown,” says Amanda Howard, a top agent in Huntsville, Alabama. “Between March 13th to April 5th, we probably had our slowest activity. But then all of a sudden this past week of April 6th to the 12th, we had an uptick of double what we saw the previous week.” But the economic future of the U.S. looks increasingly bleak. If you wait to list, you risk your home value declining as the housing market buckles under pressure from a recession and severe job losses across the country.
In Howard’s market of Huntsville, Alabama, where the median-priced home is worth around $180,000, certain properties are still moving fast. “If it’s a beautiful home at a medium price point in your area and it’s priced competitively and it’s staged well, it’s going to sell at this time,” Howard shares. “Even as of [mid-April]. we had multiple offer situations on any home that’s under $200,000. Homes in that $200,000 to $400,000 price range, it’s still a great market, but it’s just going to take a little bit longer because people are being a little more conscientious.” Real estate analysts predict that COVID-19 will most negatively impact the luxury housing market. Buyers at higher price points who have large holdings in the equity markets may postpone large real estate transactions as they wait for stocks to recover from the market plunge.
Online presence and marketability
According to HomeLight’s Flash Poll for the week of April 1, 2020, 84% of agents have shut down open houses and 45% are restricting or eliminating physical showings. That means your home must shine in online listing photos and videos to convince buyers to leave their house to view it in-person. Shivers emphasizes the importance of professional photos and video to market your home: “We always use professional cameras. Right now, more than ever, you have to make sure you have professional photography, because that’s what people are seeing online. They’re not going to open houses. They’re not driving by as much. If [sellers] are skimping on that type of stuff, then we have a problem.”
Vacant vs. occupied
Your property type also may impact your ability to sell at this time. Shivers shares vacant properties are receiving the most attention due to ease of viewing while tenant occupied homes are proving the most difficult to sell. “Tenant occupied is almost impossible because the tenants not only have some rights, they don’t want people coming through their house,” says Shivers. “I understand that and we don’t allow it. Right now, we list anything that is tenant occupied as ‘offer subject to interior inspection." With “offer subject to interior inspection,” only buyers who make an offer on the property are permitted to view it in-person. Usually in this instance buyers will include a contingency that allows them to back out of the deal if they don’t like what they see upon inspection. While more common to see for tenant-occupied properties, owner-occupied homes may be listed as “offer subject to interior inspection,” as well.
Your next steps should weigh into your decision
Shivers encourages sellers who have already secured their next home or have an immediate need to sell (job relocation, financial reasons, etc.) to move forward with their home sale. If you’re still figuring out your future housing situation, consider how COVID-19 affects your options.
Considerations if you plan to buy:
- Mortgage approval: As a homeowner, so long as you can keep making your mortgage payments, no one is probably going to pop in and audit your finances. However, if you sell your home and buy a new one, a mortgage lender is going to review your employment situation, income sources, credit, and debt. In response to COVID-19’s impact on the economy and employment, lenders are raising the criteria for mortgage approval, requiring higher credit scores and loan-to-value ratios.
- Your income security: Due to COVID-19 related job losses, the unemployment rate has skyrocketed to the highest level since 1940. Consider how an unexpected job loss may reduce your household income — this may impact your ability to qualify for a loan or make mortgage payments.
- Your back-up plan: Create a temporary housing plan in case it takes longer than anticipated to purchase your next home. You may need to rule out previous alternatives such as living with adult or elderly parents if they are at higher risk for severe illness.
Considerations if you plan to rent:
- Your credit score: Expect property managers to request a credit check and references before they hand you the lease; property owners may cautiously select new tenants to ensure they are capable of making rent payments.
- Your income security: If your company anticipates furloughs or layoffs, you may want to play it on the safe side and rent a home on the lower side of your monthly budget.
- COVID-19’s impact on your region’s rental market: Local laws may restrict your ability to view rentals in-person unless they are currently vacant.
Can you handle strangers coming through?
While showings can be limited to serious buyers with mortgage pre-approvals or even offers on the table, many buyers will want to see the house in person before committing to a purchase. Team up with your agent to disinfect and clean your home before and after people visit to keep everyone involved safe. Howard shares her team’s showing procedure: “We ask our sellers to have booties by the door and if they don’t have them, we will provide them. We ask them to have a handwashing station readily available with hand sanitizer. We also provide gloves and a basket for glove disposal, as well.” Clean your home to your level of comfort. At a minimum, you should disinfect door handles, cabinet drawers, bathrooms, and any other points of contact before and after people come through. Depending on your area and real estate agent’s advice, you may need to leave your home for private showings, the home inspection, and the home appraisal to limit possible contact. While disinfecting surfaces and adhering to social distancing practices reduces your household’s risk of coming into contact with the COVID-19 virus, they do not eliminate it. You should discuss the home sale process with members of your house before you list. You may need to adjust visitor procedures or delay your home sale depending on their response. If you live with someone who is at a higher risk for infection, you should devise a strategy to eliminate in-person showings such as selling “offer subject to interior inspection” or postpone your sale. If any member of your household displays symptoms or falls ill during your home sale, disclose this information with your real estate agent immediately and postpone any visitations until the infected person meets the Center for Disease Control’s recovery standards.
Selling now could take longer than normal
Restrictions around COVID-19 may slow certain phases of the home selling process. Shivers reports that “at least 30%-35% of the deals that we closed had extensions on them” in March. Listing your home now requires extra patience and understanding in the face of inevitable delays. Here are a few examples of steps that may take longer in the present circumstances:
- Finding a buyer: If your market activity is slowing due to COVID-19 related concerns, there may be fewer buyers actively looking for homes.
- Clearing title and recording the deed: In regions where government recording offices are deemed non-essential, many offices allow electronic filings. However, ultimately a staff member must process the files so there may be a delay if the office is understaffed.
- Receiving your buyer’s mortgage approval: With title companies, notaries, and appraisers working remotely in many regions, the timeline for closing a loan may stretch longer than average. Additionally, some lenders are currently overwhelmed by refinancing requests due to low but shifting mortgage rates, leading to longer approval times.
Your contract may include a coronavirus clause
If you sell your home during the COVID-19 pandemic, your contract may include a coronavirus clause that permits closing extensions and home sale cancellations without legal or financial repercussions. For sellers, this means your buyer may leave the deal without losing their earnest money. Shivers emphasizes: “I think it’s really important that sellers understand that at any time these people could back out of this transaction.” To protect your best interests, you can negotiate in what scenarios the buyer keeps their earnest money. For instance, you can amend the coronavirus clause to state that the buyer must forfeit their earnest money if they withdraw their offer with no reasonable cause. Additionally, you can negotiate to set deadline extensions for specific dates to keep the sale on track to close.
Few will judge if your home sits on the market
In normal circumstances, homes that sit on the market above an average number of days are at a disadvantage. Homes with a high days on market count can carry a stigma — buyers wonder if the property has something wrong with it or if it’s priced incorrectly. However, Shivers shares that at present buyers and buyers’ agents are considerate of COVID-19’s impact on the market so they are unlikely to look down upon homes taking longer to sell. Some MLSs are even suspending or pausing the accumulation of days on the market in order to accommodate for this slower period.
You can always change your mind
If you list your home and then are unable to follow through with the sale due to an illness, job loss, or other reason, you can cancel the transaction without repercussions so long as you include a COVID-19 clause in the home sale contract. To avoid any extra charges from your real estate, review your listing agreement carefully to see if they charge a fee for taking your home off the market early. You can negotiate your agent’s standard agreement to reduce the length of the contract or waive fees; they may be particularly accommodating at this time.
Get an expert’s opinion — and go from there
Selling your home during COVID-19 is a personal decision. Spend some time considering how relevant financial variables, health concerns, and local government regulations will impact your home sale process. Top agents track daily updates and evolving COVID-19 regulations. They can help you determine whether your home is marketable at this time, answer any questions you may have, and accommodate any special needs such as performing a contactless home assessment. Article Source: Homelight.com
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