Buying a Home During the Pandemic

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Real Estate

The coronavirus pandemic has thrown millions of people's financial plans off the rails, and that certainly includes home buying. If you were hoping to purchase a property soon, it is completely possible, but you no doubt have a lot of questions about COVID-19's impact on home prices, touring homes, and more.

1. Is it possible to buy a house now?
While buying a house today may be more challenging due to health and economic concerns, it is certainly possible. In fact, the U.S. Department of Homeland Security has declared that residential and commercial real estate services are an essential service that should be allowed to continue. 

However, certain aspects of the home-buying process might be restricted or look a bit different these days.  In Marin and Sonoma Counties, it is possible to view homes now that are either vacant or occupied, however there are a strict set of guidelines that need to be followed.  In both vacant and owner occupied homes only two buyers and their agents are allowed to enter the home at one time and they must be masked, & gloved.  (I have my property viewing go-bag with me that includes sanitizing wipes, booties, gloves, hand sanitizer, and disposal bag). Occupants must not be in the residence.  Gloves, wipes and booties (if needed) must be disposed after viewing  and new sets used to see the next home.  Listing agents will set up appointments to assure that buyers do not overlap and listing agents are required to clean surfaces both before and after viewings.  (this also seems to change on a weekly basis - Coldwell Banker is making sure we are on top of the latest info)

Aside from federal and local restrictions, a lot will depend on the home sellers' comfort levels. Some sellers might be fine with potential buyers touring their house. But others might not be comfortable letting strangers in their home, even though property tours are allowed.

2. Is now a good time to buy a house, financially speaking?
From a financial perspective, there are certainly some advantages to buying a home right now. For one, mortgage interest rates are historically low, which means your monthly housing payments will be lower, too. And putting a property under contract now and locking in a low interest rate gives buyers more control than living in a rental where rents might go up.

Another big consideration on the financial side of the home-buying equation comes down to competition. The coronavirus has dissuaded some home buyers from home shopping for the time being. So buyers who do venture out face less competition, which could put them in a stronger position to negotiate with sellers.

In addition to surveying the housing market and mortgage rates, you should also take a good, hard look at your personal financial situation. You'll want to gauge whether now is a good time to buy for you. Are your job and income stable, or are you worried about layoffs or the stock market?

If your own financial future is uncertain, you might want to take more of a wait-and-see approach to home buying. Or consider buying a home well under what you can afford just in case the coming months throw you a curveball.

3. How has the coronavirus affected home prices?
The coronavirus has the world economy in turmoil. But so far at least, this does not mean that home prices have plummeted across the board or that buyers can lowball their way to a bargain. Instead, the Marin and Sonoma real estate markets, home inventory remains very tight.

Some sellers have pulled their listings as they wait for better market conditions. On the flip side, a home seller who doesn't have the luxury of time is facing a smaller buyer pool, due to safety concerns and limited physical access to touring homes. So buyers could have the upper hand for a short period when it comes to homeowners who need to sell.

The only way to test a seller's level of motivation is to make an offer. But play it safe. Buyers should not assume that because of the pandemic they can automatically lowball a seller—this could turn the seller off. You might want to try offering a modest discount below asking price to simply start a dialogue.

4. Is it safe to buy a house now?
While no one can guarantee you won't catch the coronavirus, the real estate industry has worked to prioritize buyers' and sellers' health by eliminating personal interactions almost entirely during the pandemic. Even as different states reopen, you can still do most aspects of the home-buying process remotely, or at a safe social distance, when it comes to your home search that you may not have considered doing in the past.

 In California closings still need to be done in person with a notary.  (see the above photo from a closing I just had in April).  The notary and the signers are gloved, and masked, each person brings their own pen to the table, and clients receive a copy of all of the paperwork via email.

5. Are open houses or home showings allowed?
There are no "in person" open houses as we used to know them currently being held in Marin/Sonoma area. There are virtual open houses, and also open houses by appointment only with the listing agent at the home to answer questions.

If you do choose to attend an open house or tour a home, here's what you can do to stay safe:

Don't touch anything in someone else's home. Ask that the owners open cabinets and closets prior to a showing.
Stay six feet away from your real estate agent at all times. If the home is small, ask your agent to open the front door for you and wait in the kitchen while you tour the house on your own. You can ask questions via cellphone as you look around.
Wear protective booties; agents generally provide these even in normal times. Carefully throw them away when you’ve finished touring.
Wash your hands thoroughly with soap after you leave the home.
Or instead of attending an open house or private tour, you can conduct a virtual house hunt. You can also drive through a neighborhood and check out the area from the safety of your car. 

6. Should I buy a house sight unseen?
While buying a house sight unseen has long been the only option for people relocating due to a new job or military service, the trend has been on the rise for more and more folks. In fact, according to a realtor.com survey of 1,300 consumers during the week of April 5, 24% (or 1 in 4) said they'd be willing to buy a home without seeing it in person.

Buyers who consider buying a house sight unseen generally have some comfort level with the neighborhood and know the market.

Even if you're buying blind, you shouldn't operate completely in the dark. Here are some features that buyers find most helpful in such a home search.

The ability to take a virtual tour of the home
Listing and neighborhood information that is accurate and detailed
Plentiful, high-quality listing photos that show the property's interior and exterior
An agent or landlord who can walk a buyer through the property via video chat.

7. Can I buy a house if I’m unemployed?
Generally speaking, if you are recently unemployed you should think twice about buying right now. But there are some ways you can proceed, albeit with caution.

For instance, home buying is possible when you're between jobs if you have enough money in the bank to make an all-cash offer—due to a previous home sale or inheritance—and can skip the mortgage process entirely.

If you do need a mortgage, you'll need not only a high credit score and a low debt-to-income ratio, but also a source of funds to prove to lenders you can make your monthly mortgage payments. If you are a dual-income family with a spouse or significant other still working, that person could apply for a mortgage. Many lenders also allow for a monetary gift to home buyers from relatives. Sometimes a sizable gift satisfies lenders' application requirements even if the borrower is currently unemployed.

8. How long will it take to close on a house?
Yes, the length of time from an accepted offer to home closing during the height of the pandemic is taking longer. 

The simple fact is lenders are buried under paperwork as refinancing applications skyrocketed due to the historically low mortgage interest rates.

In addition to lender backlogs, social distancing and shelter-in-place orders have complicated the home closing process. While home inspections and appraisals are possible, everything is just taking longer during the pandemic.

9. Is moving allowed right now?
According to the American Moving & Storage Association, moving has been deemed an essential service by the federal government and is also deemed essential in the Bay Area.

10. How can I prepare to buy a house?
You may be interested in buying a home, but simply don't feel comfortable getting out there and house hunting right now. Luckily there are still things you can do to prepare so you're ready to spring into action later this summer or whenever you decide you're ready.

Check your credit score: The very first step in preparing to buy a home is to check your credit score. Credit scores are what mortgage lenders look at to determine whether you are creditworthy, and will dictate your interest rate. So do everything to protect your score. Many companies—from credit cards to utilities—are working with consumers who can't make payments. If you are having trouble making payments, don't just skip them. Call your lender and work out a plan.
Figure out how much home you can afford: The pandemic has roiled markets and caused tremendous economic uncertainty. So you'll want to carefully consider how much home you can afford and err on the conservative side. Check an online home affordability calculator, which will help you determine your monthly mortgage payment.
Secure mortgage pre-approval: Now it’s more important than ever to get pre-approved to show sellers you’re serious when you make an offer. Pre-approval shows how much a lender will loan you, assuring the seller that you’re financially capable of buying a home.  Some sellers are requiring pre-approvals prior to seeing a home in person.
Avoid any major changes: A major tenet of preparing to buy a home is to not make any major changes in your life or your finances. But with the coronavirus pandemic, some upheaval—such as getting furloughed—may be out of your control. Yet much of it is not. For instance, do not buy a car or pricey new furniture, or apply for a new credit card. All of those can lower your credit rating, meaning you may not be able to qualify for a home loan.                                                                                                                                                                                                                                                            Check online listings: Search for your new home from your current home.  If you see something you are interested in, give me a call and we will set up a way for you to see it either virtually, through a facetime video chat, or in person with all of the most current  Covid 19 property showing guidelines in place.

If you have any other questions about buying or selling during the Covid 19 pandemic, I would love to talk!