Editor’s note: All of HomeLight’s coronavirus information for buyers, sellers, and agents is available on our COVID-19 hub.
On one of your social-distance walks around the block, you may have noticed something surprising: for-sale signs popping up across front lawns. According to our Flash Poll for April 15, 2020, 67% of real estate agents nationwide describe business as slower than usual but still doing deals, and they estimate that 63% of sellers — in spite of the coronavirus pandemic — haven’t cancelled their plans to move.
But how does selling a home work in this new environment? Are you destined to sell for less or spend months on the market waiting for an offer? What challenges can sellers expect and how can they overcome them? To find out, we spoke with top agents across the country who’ve been navigating this new landscape since March. Keep in mind that this situation is evolving and varies market to market, but in general — and for now — here’s what the experts advise.
1. Don’t entertain lowball offers — yet
The sudden and dramatic shake-up of day to day life and the economy might have some sellers reeling about whether their home value has plummeted since the coronavirus hit, but now’s not the time to panic — or accept lowball offers, advises Rapid City, South Dakota agent Shauna Sheets.
“This isn’t ‘08 or ‘09. We’re not seeing home prices dramatically drop,” says Sheets, who started selling homes a decade ago. “We’ve heard the term ‘lowball offer’ in conversation, but we’re not seeing that in practice.”
Before the coronavirus outbreak, data was trending toward a robust seller’s market this spring. As of mid-April, 75% of agents report that prices are holding strong. Currently, low inventory is suppressing any trend toward lower prices. So in general, think twice before accepting an offer you’re not happy with.
It’s not clear how long these conditions will last, however. With jobless claims projected to reach 30 million, and experts warning of a downturn akin to the Great Depression, the housing market may very well come under serious pressure as a result.
For now, don’t let nerves or jitters get the best of you. With the assistance of your agent, you can always craft a strong counteroffer if you think it’s worth trying to negotiate with someone.
2. Expect less interest, but more serious buyers
The desire to avoid nonessential contact with others and wait to move until the pandemic subsides has caused about 43% of homebuyers to hit pause, our data shows. But there’s a silver lining, says top-selling San Antonio real agent Reagan Williamson: “The quality of the buyer has gone up significantly.”
Economic uncertainty and skyrocketing unemployment has led many mortgage lenders to tighten their qualification standards, making it harder for lower-credit borrowers to secure pre-approval or a home loan. As a result, “Our buyers are much [stronger] right now,” says Williamson. “They wouldn’t be making offers unless they were serious and well-prepared.”
Sellers can make the most of this slow but serious traffic. Here’s how:
- Let buyers experience your home online
Work with your agent to attach a 3-D self navigable tour, pre-recorded video walkthrough, or listing video to your property listing. Cyber tours give buyers a realistic experience of the property, which may help them see that your home is truly a great match.
- Boost your home’s curb appeal.
Before booking a tour, agents are taking their buyers on preliminary showings to highlight the surrounding neighborhood, street, and exterior of a home they’re interested in. So spend a quarantined weekend sprucing up your curb appeal to impress any buyers who may do a drive-by.
- Hit on your home’s highlights and key upgrades in your listing description.
Paint a vivid picture of your home with a rich and descriptive listing detailing features that a buyer might miss during the virtual showings.
3. Communicate frequently using teleconferencing solutions
Even in more predictable times, a good real estate agent is in constant contact with their client. Before the coronavirus outbreak, for example, Sheets met with her sellers once a week, at minimum.
To adapt to the new selling landscape, and despite barriers preventing in-person meetings, she and her 100+ team of agents have been keeping close tabs on the market and continuing to communicate what they see to clients on almost a daily basis through teleconferencing solutions like Zoom or FaceTime.
- Can I eliminate in-person showings and still sell my home?
- Should I take my home off the market until the shelter in place order expires?
- Do I need to cut the price of my home to sell?
- Can I move safely during this time?
Don’t hesitate to talk to your agent about any and all of the above — they will be happy to set up a virtual meeting with you.
4. List now or be ready to pull the trigger
“A lot of sellers are hesitant to put their homes on the market, which is unfortunate,” Williamson explains. In his San Antonio market, inventory is down right now, but buyer demand is still high, making it a good time to list a property while others are hesitating to do so.
At the very least, he recommends preparing your home to sell, “so whenever the shelter in place is officially lifted, we can be the first ones on the market that day and we’re not left scrambling trying to get you on the market in a week.”
Sheets anticipates the same thing in Rapid City: “When the world opens back up, it’s going to be like the floodgates opened.”
Listing your house now is getting ahead of an anticipated surge in listings (aka your direct competition). Since you’re spending more time at home than ever before, start taking the steps to prepare your home:
- Deep clean the interior and freshen up the outdoor entryway.
- Declutter your home (and increase its value by $2,584, on average).
- Organize your closets, pantries, and drawers.
- Tackle simple and affordable curb appeal projects
5. Anticipate new addenda and disclosures
Over the past couple of months as contract delays and hurdles become more common, “coronavirus clauses” — also called coronavirus “addenda” or “amendments” — have become a frequent addition to buyer’s purchase agreements across the country. These provisions permit contract extensions and even termination without repercussions.
It’s important, as a seller, that you know what you’re signing and what your options are. When you receive an offer, you should verify what the terms of the coronavirus amendment are.
Talk to your agent about negotiating the stated deadline extensions, who keeps the earnest money in what scenario, and anything else included in the addendum — but keep in mind that buyers are going to be hesitant to keep their offer on the table without some kind of contract protection specific to these circumstances.
In Williamson’s market, real estate agents have also started adding coronavirus “disclosure” statements to purchase offers. “Basically, it’s a form where the sellers and all occupants in the house, as well as the buyers and the buyer’s agents and anybody who will be seeing the house sign a form saying everybody’s in good health,” says Williamson.
Unprecedented times call for unprecedented paperwork, but make sure you consult with your real estate agent before signing to any unfamiliar documents.
6. Push for a standard closing, but plan on delays
During the coronavirus outbreak, Sheets’ biggest challenge in selling homes hasn’t been interest in properties — it’s been delayed deals because of the new COVID-19 overlays on loan requirements.
According to market data from January 2020, Ellie Mae, who processes 35% of mortgage applications, indicates that the average time to close on a loan is 48 days. “We’ve been pushing closer to 60 days,” says Sheets.
These extended timelines also stem from delays in appraisals, inspections, and other key closing services. The challenge is, the longer the closing period, the more time a buyer has to develop cold feet, says Annette Wilcox, a Norwalk, Ohio agent who earned HomeLight’s 2019 Top Negotiator achievement. Knowing that, you might want to push back when offers come in with long closing periods. While some delays are inevitable and fall under the coronavirus clause, aim to keep your buyer on track with a standard 30/45 day closing.
7. Check to see where the buyer’s loan is coming from
Wilcox always encourages her sellers to go over any offers with a close eye, but she’s asking them to pay particular attention to where buyers are banking. “Sellers always want to just look at the price, but now we’re seeing them look at the name of the bank, and wanting local bank names on pre-approval letters,” she says.
To clarify, says Wilcox, there’s nothing wrong with a buyer going online to secure a mortgage with a major lender. But from the seller’s perspective, if there’s a hiccup with the deal, a buyer who banks with a local branch and who’s developed a personal relationship with the people there might have a better shot at closing.
“Say someone was furloughed a week during the virus,” Wilcox explains. “A local banker is more likely to know that [the employer] closed down for a week to put safety measures in line. The bank have no worries about [the buyer] getting laid off again, so they will go through with those loans.”
In her experience, online banks have been less understanding of these circumstances and more challenging to get a hold of during these times. “It’s all about relationships right now,” she says.
Trends in real estate will vary based on your location and market, and you should work with your agent to develop a game plan that makes sense for you. But, “the reality is, even in the midst of COVID, people have to move,” says Sheets. “And we’re still seeing enough of that to have people to sell to.”
Header Image Source: (Esther Driehaus / Unsplash)