Agents have adapted to the pandemic with a range of digital tools that have significantly altered the process of buying and selling real estate.
Does anyone remember life before mid-March of this year? We were starting to enjoy some nice weather and longer days of sunshine, going out to dinner and going for a run without a mask on were activities enjoyed by many of us.
For some people, it was simply looking at real estate that brought them joy. Over the past couple of months, the desire to look at real estate has become even more important to many who are interested in finding a different way or home to shelter in place. Real estate is still transacting and people are relocating, although the process has evolved.
A Property-Picking Evolution
Many consumers begin their home searching online and visit open houses to get a sneak peek at what the home looks like in real life. Online searching, in many cases, has improved during this time period. More agents are choosing to do virtual home tours and use interactive 3D technologies to allow consumers a virtual experience walking through the home, turning around, looking up, down and sideways. In-person open houses have been converted to virtual ones, where agents live-stream their open houses while showing viewers the insides and outsides of homes.
One of the key changes brought on by the pandemic is that the real estate process has been made more efficient in some respects. Today, buyers who are coming out to physically look at a property while socially distancing and washing hands and taking the recommended safety precautions are doing so after virtually viewing the properties, driving by the properties and getting pre-approved by a lender. As a result, buyers are only viewing properties that they have significant interest in buying.
Gone are the days where buyers jump into an agent’s car and view 15 houses a day for several weeks in a row. Buyers have become more focused on their needs and wants and are narrowing in on the properties that most closely match those, then making a much quicker decision.
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With historically low interest rates, many are taking advantage by getting a mortgage to purchase a home or refinancing existing mortgages. Although the underwriting requirements have not changed for government-backed mortgages, some banks have increased their credit score requirements and down payment amounts due to their own liquidity challenges. With new programs such as Payroll Protection Program and the expansion of the Small Business Administration’s Economic Injury Disaster Loans, many banks have extended so much credit that they need to hedge their risks when it comes to issuing mortgages.
This situation has caused a challenge for some, though there are many banks that are not requiring anything above and beyond the federal guidelines. Another change to the mortgage process has been the easing of appraisal requirements. Today’s financing process now includes approved drive-by and desktop appraisals for federally backed loans. This allows an appraiser to use data available via tax and multiple listing service records to come up with a value without ever having to physically enter and inspect a property.
Changes in Closing Process
Since 1979, Massachusetts residents seeking to sell their homes have been required by law to have a certified inspection of smoke detectors before the closing. In 2005, the state added an additional requirement to also include the inspection of carbon monoxide detectors.
On March 30 of this year, Gov. Charlie Baker issued an emergency order that changed the inspection requirement. The sale and transfer of residential properties may now be deferred for up to 90 days after Massachusetts’ state of emergency is lifted if certain legal conditions are met. While there are still some fire departments conducting inspections, this compromise has allowed closings to happen across the state without the certificate provided it would be done post-closing.
The traditional home inspection has also evolved during the COVID-19 pandemic. Home inspectors have operated in various ways in order to accommodate home buyers safely for the past couple of months. Some inspectors performed the inspections on their own and had the buyers join for the last 15 minutes so that the inspector could point out areas of concern or importance while using social distancing. Other home inspections used video streaming to share with the buyers through virtual means while they conducted their inspections. Others simply performed their inspection on their own and followed up with the written report and answered questions via phone call. All these approaches allowed the buyers to receive complete information so that they could make an informed decision on how to proceed with the transaction.
Kurt Thompson
One final hurdle was a requirement for closing attorneys to gather signatures and physically deliver documents in a timely fashion to meet the terms of the contracts. At the beginning of the pandemic, many times attorneys would set up a table in their office parking lot where clients would sign documents, then return to their cars. The attorneys would then have the other party sign and return to their cars until the documents were fully executed. To rectify this, the state enacted a remote notarization law that allows the use of video conferencing and affidavits during the state of emergency. While this has proven to be successful for some, there are limitations to the law such as a requirement that all parties all need to be located within Massachusetts to comply with the it.
As businesses begin to open, the real estate industry will continue to change and evolve. As evidenced by what we have seen so far, technology will take a greater presence within the transaction.
Kurt Thompson is the 2020 president of the Massachusetts Association of Realtors and a broker with Keller Williams Realty - North Central in Leominster.
