With the coronavirus spreading, the world is changing very rapidly. In response, the real estate world is swiftly adapting to the needs of our communities. On March 26, 2020, Governor Polis issued a state-at-home order requiring most businesses to remain closed during this period. However, specific professional services, such as legal services, title companies, accounting, real estate appraisals and real estate have been allowed to continue. Although real estate has been deemed a “critical business,” this is not a license to conduct our work as usual. Far from it! With this order comes the urgent responsibility to protect the health and safety of the public while helping clients with their housing needs.
As I’ll explain, this crisis will lead to accelerated advances and developments in the real estate industry. While some innovations and adjustments will be positive and will likely endure in the long term, other changes, hopefully, will be short lived.
In the mid-1990s, there were predictions that the Internet would replace real estate agents, and home buyers would not need real estate agents in order to view houses. Over two decades later, we’ve learned that nothing can replace the experience of seeing a house in person with the help of an agent. Today, personally viewing a home you want to buy is our greatest challenge during the current coronavirus crisis.
The National Association of Realtors® (NAR) has issued best practices for real estate professionals to keep their clients safe throughout the entire process of buying or selling a home. These best practices are updated as soon as new information becomes available or new restrictions are put in place. Here is a brief overview of the practices this week. Keep in mind, we are in a fast-changing business environment. Next week, the best practices mentioned here may no longer apply. Be sure to check with your Realtor® for the latest information.
What to expect if you’re trying to look at a home today
First of all, in-person open houses with groups of potential buyers welcomed to view homes have been suspended. Nevertheless, as of writing this article, you can still go see a house in person through scheduled showings. That is, unless the seller has pulled the property off the market and is no longer allowing showings. If the seller is still allowing the house to be shown, here are some basic protocols being followed that are different than a few short weeks ago. If you are working with your Realtor to see a home, plan on driving there yourself. Your Realtor will take a separate vehicle. Once you arrive at the home, no handshaking is allowed, but you can wave from at least six feet apart. Some sellers are asking you to certify (sign) a form with questions, such as if you have traveled abroad, have you been sick, etc. Once inside the house, you might be asked to wear booties, gloves and maybe a mask. You likely will be asked to use hand sanitizer on the way in and on the way out. You will be asked to touch as little as possible and view the home quickly.
Some sellers and listing agents are asking prospective buyers to review all marketing such as website, virtual tours, photos, 3D scans and videos before an in-person showing and acknowledge they have done so. This way, an unnecessary showing may be prevented because the home doesn’t have one of the features the prospective buyer desires.
Showings will be scheduled at different times so that there will be no overlap of prospective buyers seeing the home at the same time. In addition to this, there might be other restrictions in place or that evolve as we work our way through this process.
Homes currently listed for sale on the market
If a property was listed on the market before the first week of March, there’s a good chance that all the work to produce a virtual tour has been done. In this case, it makes it convenient for prospective buyers to view homes online. You may also be able to arrange for a virtual showing over Skype, FaceTime or live streaming.
If you decide to write a contract on a home, your Realtor can advise you what might be realistic dates and deadlines in the contract. In fact, if you are unable to view the home personally due to coronavirus restrictions, you might make an offer conditional upon having an acceptable viewing and/or inspection at a later date.
Homes currently under contract and writing a contract today
The transaction process is quickly being transformed in response to the coronavirus crisis. Last week, the Federal National Mortgage Association (FNMA) and Freddie MAC, the source of most mortgage funding in the U.S., announced that an interior inspection by the appraiser would not be necessary. This announcement will keep transactions moving along by eliminating the need to have another person enter the home. Not all loans are eligible for this appraisal process. Be sure to check with your mortgage lending professional to see if it applies to the loan you are getting.
Most every home buyer wants a home inspection before closing on their new home, however, many sellers right now would rather not have another person entering their home who would need to touch everything. Seller, buyer, listing agent, buyer agent and the inspector all need to communicate and agree on what will constitute acceptable entry behavior in the home and what protective equipment and supplies will be used.
The Colorado Bar Association produced a form to provide for extensions in the event that a buyer or seller is unable to perform due to a COVID-19 shutdown or quarantine. The form can be attached to a new purchase contract or added to an existing one. This form is not a Real Estate Commission approved form but is available on the Colorado Real Estate Commission’s website, the Colorado Association of Realtors website, and in the contract writing software most real estate brokers in the State of Colorado use. The real estate broker is still allowed, as always, to use the Standard Amend/Extend Form to set out dates that work for all parties and keep the transaction together for the benefit of all. Your Realtor and/or your attorney can help you decide if using this form is right for you.
New home listings
There is already a shortage of inventory of homes to view in Boulder County and across the U.S. March, April and May are historically the months when the greatest number of homes come on the market. This spring is likely to be quite different. Sellers with any of the underlying health risk factors for coronavirus likely won’t put their home on the market unless they have another place to go. Other sellers who don’t have an absolute reason they need to sell will likely wait until buyers can easily view homes again. Obviously, timing on when that will happen is uncertain. If you are one of those sellers who plan on delaying putting your home on the market, now is a great time to get those home projects and improvements completed for when you are ready.
If you do decide to put your home on the market in the next few weeks, it is certainly feasible. You can work with your Realtor and various vendors to work out a plan. Since physical showings of homes have slowed, your home’s online presence and digital marketing is critical. Your Realtor and vendors can work with you to create a plan. For example, hiring a marketing company to produce a virtual tour of the home will be a process similar to bringing in a home inspector, as described above.
Closing on your home purchase in a coronavirus environment
Closing on a home in Colorado is almost always a joyous occasion. In Colorado, we are known as a “Table State”. All the parties and the money involved in the transaction are present at the same time at the “signing table” where papers and money change hands – and sometimes a celebratory bottle of champagne is popped. Ah, the good ‘ole days, only three weeks ago!
Due to the coronavirus, the home closing process has evolved rapidly and is now is quite a divergent experience. Anyone attending the closing must go through the same coronavirus screening process and protective measures as seeing a house. Buyers and sellers must close separately. Some title companies are even offering curbside closing where you just drive up and sign the papers in your car!
Electronic closings are also being modified. Some title companies have been closing cash transactions 100 percent electronically. Part of the hang-up in transactions going electronic is that in order to notarize a signature, it had to be signed personally in front of a notary public. Governor Polis just announced last Saturday that the requirement for an in-person appearance in front of a notary has been temporarily suspended to enable remote notarization. Remote notarization entails remote authentication, verification of identity, and audio-visual conferencing and recording. Title companies are getting up to speed with this new ruling to facilitate one less require in-person contact at a closing.
Adapting to change
The home purchase process has never changed with such tremendous speed in such a short period of time. Your professional Realtor has a variety of resources to stay informed to properly guide you through the process.
By Duane Duggan. Duane has been a Realtor for RE/MAX of Boulder in Colorado since 1982 and has facilitated over 2,500 transactions over his career, the vast majority from repeat and referred clients. He has been awarded two of the highest honors bestowed by RE/MAX International: The Lifetime Achievement Award and the Circle of Legends Award. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life. For questions, e-mail [email protected], call 303.441.5611 or visit boulderco.com.