COVID-19 and the Real Estate Market
March 20, 2020
In this new world of self-isolation and social distancing, it’s possible for many people to be working from home, though it doesn’t work that way in real estate. Don’t worry, I’m not going to try and make a case for buying and selling right now!
At this point, my priority is to be part of the solution and not the problem by staying home as much as possible and I’m trying to connect with friends so as not to feel so isolated. Technology still allows me to speak with clients and friends, which is great. In fact, I had a meeting with a seller this week using Zoom. It’s not quite the same as an in-person meeting, but there is more of a connection with someone than using text or email. That’s just one way the playing field looks a lot different for anybody who’s still in the market today.
The Toronto Real Estate Board has published their recommendations about best practices. I think it’s important to have rules in place because despite the uncertainty, there are still listings coming onto the market. I believe this is because it often takes a lot of time to prepare a home for sale and once the wheels are in motion, some sellers are opting to continue with the process.
As well, there are still buyers who want to see properties because they feel like it’s an opportunity to make an offer without the same heated level of competition we’ve been experiencing for the past few years. I suspect most people who have been looking but haven’t yet bought are probably going to put their home purchase on the back-burner until there’s more confidence that “flattening of the curve” is happening.
Open houses for the most part are being highly discouraged – and if Realtors are still holding an open house, they should be only letting one group of people in and ensuring that they’re not touching anything. I’ve decided not to do open houses so that my sellers, myself and the visiting buyers will not be put at risk.
For those that are looking for a home, the first viewing is now happening online with a video tour, which in my view is better than a 3-D virtual tour because the video doesn’t skew dimensions of the rooms and gives a fuller picture.
If a client is seriously interested in a property once they have viewed all the marketing collateral, one option is to make an offer that’s conditional on viewing. The idea of buying a home without ever being inside it is too big a pill for most to swallow. Making an offer conditional upon viewing the home is a logical step.
When booking an appointment, there are some brokerages now requiring that agents acknowledge/sign off that clients haven’t been exposed to the virus, haven’t travelled in the past two weeks and aren’t feeling any of the symptoms.
Before entering the property, the realtor has to agree to sanitize the lockbox and themselves. We are asked to not touch any lights, doors, surfaces, and that we must advise clients not to bring any extended family or children. When we meet at the property, we maintain a safe distance. (This can be challenging in an elevator.) Before entering, we must agree to use disinfectant wipes and hand sanitizer, which is increasingly hard to find.
The purchasing process is also different – whereas a deposit has traditionally been presented as a certified cheque, it now makes sense to accept an electronic transfer. And if you can remember the last time you bought or sold, there’s an enormous amount of paperwork; that’s now done online. Even the exchange of the keys will be different. Rather than handing over the keys physically at the time of closing, they’ll be kept in a lockbox and the code will be released when the property closes.
It’s far too early to make any predictions, but there are a few considerations to keep in mind before buying and selling in our unchartered market. First, the closing date in an Agreement of Purchase and Sale is fixed but what if the buyer or the sellers are quarantined? There now needs to be a provision in the agreement to address this as quarantine may affect a party’s ability to close. Second, is the banks their appraisal process based on the virus’ potential effect on the overall market? Perhaps making an offer conditional upon obtaining satisfactory financing will now become the norm again?
The interesting thing is how transformative it will be as to how people now do business in real estate and other industries. It’ll shine a light on efficiencies and how it’s possible to do our jobs in a different way. If anything, this situation really highlights how heavily we depend on many of the people we took for granted just a few weeks ago – those working in supermarkets and pharmacies (both at the register and behind the scenes), truck drivers and medical staff. They have now, along with many other workers, become our unsung heroes.
If you have any questions about what’s happening right now, please get in touch – we can chat, email or video call! In the meantime, take care of yourself and your families!