Home sellers are canceling open houses. Lenders are extending the time it takes to close a deal. Realtors are skipping the live walkthrough, giving video tours instead.
From going to the office to dining out, there’s virtually no aspect of American life untouched by the coronavirus, and that now includes buying and selling a home.
A brisk housing market is expected to cool a bit as fallout from the virus, including layoffs and statewide mandates that most residents stay home, prevents some people from going through with a purchase.
But for those continuing their housing search or in the midst of a sale, the coronavirus is upending the hunt for a home.
“It’s absolutely different than anything I’ve seen in 20 years of real estate,” says Danielle Parent, a realtor in Cleveland who works for the brokerage Redfin. But “there are still certain reasons people need to sell or buy a home even (in) today’s climate.”
Personal touch gets less personal
Dana Bull, a realtor for Sagan Harborside Sotheby’s International Realty in the Boston area, says her office is “no longer driving clients around in our cars. They have to meet us at the property” to reduce the risk of spreading the virus.
In-person showings also tend now to be private, with even the seller’s representative skipping out.
“A lot of times the listing agent isn’t there,” she says, adding that they are wiping down door knobs and banisters when they are done. “We’re committed at this point to just private showings to keep better track of what people are touching … It’s easier when it’s just you and your buyer.”
Remote house tours
Brokers have been able to conduct tours via Facetime and other tools for years, but such platforms have become invaluable now that Americans are being encouraged to maintain a safe social distance to slow the spread of COVID-19.
Real estate search site Zillow says that the number of 3D home tours created with its software has skyrocketed, surging 215% last Wednesday as compared to the volume seen before the virus’s outbreak, and 29% from just the day before.
Redfin, a brokerage with offices in more than 90 metro areas across the U.S. and Canada, canceled all open houses on March 16. And while agents often take the lead in taping video tours for their clients, homeowners are taping their own guides in states like California where most workers must stay inside.
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“Everybody’s become very resourceful,” Parent says.
Delays in the process
Key parts of the home buying process typically have to be done in person, such as the recording of a title at a county courthouse or clerk’s office. But that’s proving to be difficult in some parts of the country.
Other steps in the home buying process are also coming under scrutiny because of the need to avoid personal contact.
“An appraiser has to go into the house and there are concerns there when it comes to social distancing and quarantines and lockdowns,” says Joel Kan, associate vice president of economic and industry forecasting for the Mortgage Bankers Association, adding that appraisers have also been stretched by the deluge of people trying to take advantage of low borrowing costs.
Some counties allow documents to be signed remotely, but “for locals where those options are closed,” Kan says, “a lot of these loans are not going to close any time soon until there’s some kind of resolution.”
Chase Bank says it has not had to alter the amount of time interest rates are locked in on mortgage applications, with loans typically closing within 45 days. But it says some delays in the process could happen.
“The majority of our purchase loans are still closing on time,” the bank said in a statement. “As of now, we haven’t had to change or extend our rate lock. We will be closely monitoring third-party verification, like title and employment verification.”
Many lenders are also having a significant number of their employees work remotely, because of coronavirus, a change that could lead to hiccups and slowdowns as employees adjust, Kan says.
Wells Fargo is “recommending that homebuyers choose their closing dates carefully to account for potential delays,” says Tom Goyda, the bank’s senior vice president of consumer lending communications.
Some rates being locked in longer
Interest rates have been volatile and anxious borrowers are eager to get the deal that will cost them the least month to month. Some lenders are extending the typical 30- to 60-day windows to lock in rates to up to 90 days, Kan says.
Interest rates for Wells Fargo customers looking to refinance were being locked in for 120 days before the coronavirus outbreak, Goyda says. But in the midst of the current crisis, that extended period is staying put.
“That’s longer than what you’d see in a typical market environment, ” Goyda says, “but with the application surge that started last year when rates went down, we’ve actually had it in place for some time … And now it makes sense in the current situation.”
COVID-19 gives buyers and sellers an out
The California Association of Realtors has come up with clauses that would extend the amount of time buyers and sellers have to close their transaction by up to 30 days or longer, and also allow them to back out of the deal if the coronavirus affects them.
The virus “has had unprecedented impacts on real estate transactions, including, but not limited to, travel restrictions, self-imposed and governmentally required isolations, and closures of both governmental and private offices required to fund, close and record real estate transactions,” the clause reads.
If those obstacles arise, and one or both parties cancel, buyers can get back their deposit, minus any fees or costs that they paid, the clause says.
Calls for remote signing to go nationwide
The delays that may occur if appraisers or attorneys have difficulty getting signatures on documents in person has lent new urgency to a bill that would enable transactions to be signed off on remotely.
Twenty-three states already have remote online notarization policies “but borrowers in more than half the country remain unable to close a real estate transaction without an in-person signing,” says Vince Malta, a broker at Malta & Co., Inc., in San Francisco who is president of the National Association of Realtors.
Malta says the group anticipated federal lender such as Fannie Mae and Freddie Mac “will be issuing guidance in the next few days covering the appraisal process during the COVID 19 crisis.”
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