As we’re entering the spring selling season, the explosion in coronavirus cases is crimping home sales. In other circumstances, this spring would have been booming – the economy had been running strong, mortgage rates sat near all-time lows and consumer confidence was high.
Now the coronavirus is slowing the market, if not the enthusiasm for buying a home. Still, buyers and sellers are coming together, and if you’re out in the market now, it may indicate that you’re serious and ready to strike a deal, despite today’s hurdles, says Dr. Jessica Lautz, vice president, demographics and behavioral insights at the National Association of Realtors (NAR).
How homebuyers are coping during the pandemic
One of the biggest of these hurdles is the potential danger of visiting a prospective home. Would-be buyers are not keen on entering a home where they could be exposed to the coronavirus, nor are sellers especially cordial in receiving a parade of unknown buyers. And realtors, of course, are in the middle of the process, exposed to the issues of both parties.
Inspections and appraisals are huge hurdles for the industry as well, given that individuals conducting them typically need physical access to the home and are concerned about the health threat, too.
“There are a lot of sellers who want to avoid unnecessary traffic coming into their homes,” Lautz says.
To overcome some of these difficulties, buyers and sellers are increasingly turning to digital tools. While these tools had already seen some adoption before the coronavirus, now they’re becoming increasingly en vogue as “social distancing” is the new normal.
“Realtors can show buyers a virtual tour of the home and no one ever sets foot in it,” Lautz says.
That’s only accelerating existing trends in home shopping, where buyers have staked out their prospects before going to visit them. According to NAR’s 2019 Survey of Home Buyers and Sellers, about 44 percent of buyers first looked for properties online before shopping in person. And a whopping 93 percent of all buyers looked online at some point during the buying process.
And for appraisers and inspectors, more lenders are accepting exterior inspections or even appraisals based on tax records and other publicly available information.
If you can find a house that you like, then you’ll need to secure a mortgage, a process that’s taking longer these days, through no fault of the seller or buyer. Low mortgages rates have led to a rush of business, both new mortgages and refinances, and that’s slowed lenders.
Buyers may be slowed in receiving employment verification from a short-staffed employer, while it may be difficult for municipal and county offices to officially record the property transfer when many are closed or short-staffed themselves. At least 1,000 recording offices around the U.S. have reduced hours or closed entirely, according to the American Land Title Association.
Reliance on digital is increasing
Many states have authorized electronic notarization for the closing process. It’s already available in more than 20 states, according to the Wall Street Journal, and other states have taken emergency measures to allow the electronic process, in order to speed closing.
“Our members are reporting that they’re frequently using e-signatures rather than being available in person,” says the NAR’s Lautz.
So both buyers and sellers are using digital tools that speed the somewhat old-fashioned process of homebuying. Still, both sides need to realize that closing the home sale will take longer due to the coronavirus, and they need to factor potential delays into the process.
Lautz explains that digital tools can also mitigate those delays, if not outright eliminate them, helping both buyers and sellers. “Buyers can focus the home search process to the most likely targets, rather than seeing every home they might be interested in, and then they can work with an agent to see these top candidates,” she says.
Sellers, on the other hand, can avoid a parade of unnecessary buyers through their home.
With the potential for delays already part of the expectation now, buyers need to stay focused on completing paperwork accurately and on a timely basis, so that the process is not delayed any further. Completing paperwork is one of the top concerns of homebuyers, says Lautz.
Delays are making the process more cumbersome, but buyers and sellers who are out in the market right now may be more serious about making a deal work because they need to get it done. That could be beneficial for both sides of the transaction. To avoid delay, buyers should know what kind of mortgage rates they’ll be able to obtain and how much house they can afford.