Despite the coronavirus pandemic, the real estate industry is doing just fine. Although most businesses are only reopening now, and most people are yet to return to work, home sales have been stable since May. Indeed, the National Association of Realtors reported a 20% jump in sales for June.
“Incredible as it is, the real estate market is hot,” says Lawrence Yun, Chief Economist at NAR.
As expected, though, the home selling and buying process hasn’t been and won’t be the same for another few months, at least. If you intend to enter the market soon, the following are some changes and trends you need to keep in mind.
New Showing Guidelines
Throughout the pandemic, NAR has provided home showing guidelines to help buyers and sellers execute business without putting each other at risk of contracting the virus. Currently, the association is advising as follows;
- Both buyers and sellers must check and comply with state and local executive orders to confirm the permissibility and specific requirements for conducting in-person showings.
- Buyers should consider narrowing property searches to photos, virtual tours, and leveraging other technologies to limit in-person showings.
- Sellers are encouraged to ask buyers for pre-qualification letters to limit in-person showing only to qualified and serious buyers.
- Sellers are advised to limit the number of persons who may attend a showing. The association’s recommendation is at most four people per showing.
Online and Drive-By Appraisals
Home valuations are continuing. But, not as usual. Instead, most of them are happening remotely and the rest through drive-by arrangements.
It’s particularly important to note that the government is vouching for drive-by and desktop appraisals for all government-backed loans. However, there’s no need to panic as both are fairly straightforward processes.
In desktop/remote appraisal, the appraiser uses tax records and information from multiple listing services to determine the property’s estimated value. In-person visits aren’t needed. Drive-by appraisals, meanwhile, involve the appraiser visiting the property, but only looking at the exterior. The information collected is then used alongside desktop appraisal to determine the property’s estimated value. More guidelines are available on the Appraisal Foundation’s website.
At the same time, you must also be aware that some private lenders still demand in-personal appraisals. Private lenders make up about 35% of first-lien mortgages. That means around 1-in-3 home buyers may need in-person assessments even in locations under lockdown.
Whenever this is the case, all parties must adhere to CDC guidelines. Everyone must wear a face mask and gloves. Also, maintain a 6-foot distance from each other throughout the transaction.
Remote Inspections and Walk-throughs
The National Association of Certified Home Inspectors (NACHI) has drawn up guidelines to help its members do their jobs without risking their lives of the lives of others during the pandemic. Indeed, all NACHI members are now required to complete the InterNACHI Covid-19 Safety Guidelines for Home Inspectors Course.
Among other things, the course recommends that inspectors video-record the inspection process for clients to watch later. Alternatively, inspectors can “use live video chat or FaceTime” to conduct a virtual inspection as the client watches. Also, they are advised to transmit all results and inspection-related documents electronically.
Walk-throughs are being conducted the same way. Real estate agents are advised and even encouraged to conduct walk-throughs via live video. Where the agent chooses to accompany their client on the walk-through, both parties must wear masks, wash their hands when entering and exiting the property, and stay six feet apart throughout the process.
Mortgage – Rates, Locks, and Employment Verification
The majority of lenders are still offering value-for-money mortgages. However, you may notice a few changes in the industry as follows;
- Mortgage Rates: Mortgage rates, in general, have declined. The rates hit a new record low at the height of the virus. However, the rates keep fluctuating, so be warned.
- Mortgage Locks: Mortgage lock periods are now longer. The duration depends on the lender and type of loan. But, generally, you can now hold onto that good rate for a few more weeks.
- Employment Verification: Most lenders are taking the buyer’s employment status even more seriously. Unlike in the pre-pandemic period where a call to the individual’s employer was enough, now you’ll also need to show a year-to-date pay stub and recent bank statement to prove your employment status.
Closing Takes A New Forms
Finally, the traditional closing ceremony where people sat around a table, signed paper documents, and perhaps even shared a toast is gone. Instead, title companies are being creative.
Many are arranging drive-through closing where you sign the documents at a window. Others are even stricter, only allowing drive-by signing where no one leaves the car. And in some cases, the closing date is left open-ended. It’s all about finding a formula that works.
- COVID-19 Pandemic Resources for Minnesotans
- Traditional vs. Modern Way of Selling a Home
- How To Sell A House During The Holidays
About Transition Realty
Transition Realty owner Steve Lehmeyer specializes in helping people manage real estate transactions in the Minneapolis/St. Paul area. His experience in the Minnesota real estate market spans 20 years. Steve and his team work with clients to buy & sell single-family homes, townhouses, condos, lake homes, and investment property. Download a free home search app for your smartphone or search the MLS at TransitionRealty.com.