Buying or Selling a Home During a Pandemic
Have you thought about buying or selling your home in 2020?
The real estate industry came to a stand still in March due to the COVID-19 pandemic, and now is slowly recovering in parts of the United States . It is possible to buy or sell a home in the current market, but the process might look different as well as pose new guidelines and challenges.
While no one knows what the “new normal” will look like, here are some things you may encounter when buying or selling a home.
Stricter credit requirements
According to the Mortgage Bankers Association, the availability of mortgage dropped 16% in March 2020; it’s lower level since June 2015. This drop means many lenders have more stringent criteria for mortgage applicants due to COVID-19. For potential borrowers with smaller down payment funds and lower credit scores, it may be more difficult to qualify for a mortgage. While this doesn’t mean qualification is out of the question, you may have to shop around a little more.
Open House safety protocols
Since the pandemic, buyers and sellers have tried out virtual tours which allows people to view a home online from the comfort of their home. This has resulted in an increase of buyers making offers without physically setting foot in the house.
Yet Showing Time through Midwest Real Estate Data MRED showed the following statistics: August 19, 2019 +17.3% from the year prior and 2020 +56.3% over 2019; September 10, 2019 +13.0% from the year prior and 2020 + 27.9% over 2019 and as of October 11, 2020, 2019% average was +0.1% from the year prior and 2020 is +25.8% over 2019.
Per Illinois REALTORS®, it is legal to hold open houses (as of May 29, 2020) as long as extra safety precautions are taken. Some of these measures include limiting occupancy to ten people or less, practicing physical distancing, wearing protective face coverings and gloves and frequent cleaning and disinfecting of surfaces. Sellers may take precautions such as opening all interior doors so potential buyers can look inside rooms and closets. Buyers tend not to touch surfaces during in-home showings.
Prior to a physical showing, the buyer, seller, and real estate agent should decide on how and when the property will be shown based on Center for Disease Control (CDC) recommendations.
A home appraisal is normally required for mortgage approval. However, nothing is normal in a post-COVID world including real estate. Some lenders are allowing desktop or drive-by appraisals so the appraiser doesn’t have to enter the home. To estimate the value of a home, the appraiser uses photos of the interior and exterior as well as market research data.
Unaccompanied home inspections
Usually the buyer and real estate attend the inspection so they can ask questions about any issues and potential solutions immediately. Inspectors now are able to assess the home on their own and share their report, along with photos and video, with the clients.
This is not an ideal situation as underlying issues can get lost in translation. If you’re a potential buyer, carefully review the report and ask questions about anything you don’t understand or seems unclear. For sellers, verify that your inspector is taking the necessary precautions to prevent the spread of COVID-19. The American Society of Home Inspectors recommends that inspectors wear disposable shoe coverings and use hand sanitizer before entering homes, wash their hands after inspecting kitchen and bathroom(s), and sanitizing surfaces after inspection.
There are usually penalties for not meeting deadlines or for backing out or a purchase as outlined in a home purchase agreement. According to the National Association of Realtors, real estate agreements include clauses to protect buyers and sellers if they have to delay or cancel an offer due to COVID-19 circumstances. These clauses may include, but are not limited to, government-mandated closures and availability of inspectors or appraisers.
Physically distanced closings
Prior to COVID-19, your real estate agent would attend the closing with you. Now only the essential parties are at closings – usually the buyer, seller, and title company representative – and documents are passed across a six-foot table. Although there have been closings performed outdoors and through car windows. Many documents also are signed electronically in advance to expedite the process and limit physical contact.
If you’re looking for expert advice on buying or selling your home during the pandemic, Starved Rock Realty has more than 25 years of real estate experience and can provide you the support you’re looking for. To learn how Starved Rock Realty can help you with your real estate needs, contact one of our agents today or call us at 815-667-9990.