You may have had plans to sell your home before the Coronavirus hit. Now you are faced with the tough decision of whether or not to move forward - and when.
Some are waiting it out for now and hoping the situation improves in the coming months. However, not every seller has the luxury to take such an approach without making some serious trade-offs. They may be facing a job relocation, a growing family, etc.
Selling a home in 2020 is going to look a lot different than in the past. So much so, that people have stopped selling their homes altogether. Considering the lasting effects of the virus could carry into 2021 and beyond, we can’t expect to be completely in the clear anytime soon in regards to putting out that for-sale in the front yard.
Here’s what top agents in the field are seeing in their market and how they’re advising homeowners who are struggling with what to do next.
Act before property values drop
Experts are advising to sell now before property values drop. “If I’m a seller and I know that I’m going to sell guaranteed in the next two years, I am making sure that I get my home sold — because real estate is sticky,” says a top real estate agent.
“It’s not like the stock market that goes up at 1,200 points one day and down 2,000 the next day. It takes a while for us to see the depreciation aspect, and it takes a while to get it going on the appreciation side again.”
Data also supports these statements. You may assume that the coronavirus would impact all markets as swiftly as it did stocks. But housing is more stable, at least in the short term. Even after COVID-19, a severe supply shortage has propped up home prices for the time being. In March, the number of homes for sale declined 15.7% compared to March 2019, while the national median listing price grew 3.8%.
According to HomeLight, 75% of agents report that home prices are holding steady in their market. There’s definitely something to be said for now being a unique — and potentially fleeting — window of opportunity for sellers.
But the economic future of the U.S. is uncertain. If you wait to list, you risk your home value declining as the housing market buckles under pressure from a recession and severe job losses across the country.
Some homes may be easier to sell than others in this environment
Before you list, ask your Assist2Sell real estate agent how likely your home is to sell in this unusual market.
Some properties fare a better chance of selling than others based on factors like:
A well-kept home at a medium price point in your area, that is priced competitively and staged well is likely going to sell at this time.
An agent states: “Even as of mid-April we had multiple offer situations on any home that’s under $200,000. Homes in that $200,000 to $400,000 price range, it’s still a great market, but it’s just going to take a little bit longer because people are being a little more conscientious.”
Real estate analysts predict that the luxury housing market will be hit the hardest by COVID-19. Buyers at higher price points who have large holdings in the equity markets may postpone buying as they wait for stocks to recover from the market plunge.
- Online presence and marketability
According to HomeLight, 84% of agents have shut down open houses, and 45% are restricting or eliminating physical showings. That means you must rely more on online listing photos and videos to convince buyers to leave their house to view it in-person. Professional cameras and photography will most likely sell your home quicker.
Vacant properties are receiving the most attention due to ease of viewing while tenant occupied homes are proving the most difficult to sell.
With “offer subject to interior inspection,” only buyers who make an offer on the property are permitted to view it in-person. Usually in this instance buyers will include a contingency that allows them to back out of the deal if they don’t like what they see upon inspection. While more common to see for tenant-occupied properties, owner-occupied homes may be listed as “offer subject to interior inspection,” as well.
Your next steps should weigh into your decision
Sellers who have already secured their next home or have an immediate need to sell (job relocation, financial reasons, etc.) should move forward with their home sale. If you’re still figuring out your future housing situation, consider how COVID-19 affects your options.
Considerations if you plan to buy:
- Mortgage approval: In response to COVID-19’s impact on the economy and employment, lenders are raising the criteria for mortgage approval, requiring higher credit scores and loan-to-value ratios.
- Your income security: Due to COVID-19 related job losses, the unemployment rate has skyrocketed to the highest level since 1940. Consider how an unexpected job loss may reduce your household income — this may impact your ability to qualify for a loan or make mortgage payments.
- Your back-up plan: Create a temporary housing plan in case it takes longer than anticipated to purchase your next home. You may need to rule out previous alternatives such as living with adult or elderly parents if they are at higher risk for severe illness.
Considerations if you plan to rent:
- Your credit score: Expect property managers to request a credit check and references before they hand you the lease; property owners may cautiously select new tenants to ensure they are capable of making rent payments.
- Your income security: If your company anticipates furloughs or layoffs, you may want to play it on the safe side and rent a home on the lower side of your monthly budget.
- COVID-19’s impact on your region’s rental market: Local laws may restrict your ability to view rentals in-person unless they are currently vacant.
Can you handle strangers coming through?
While showings may be limited, any buyers will want to see the house in person before committing to a purchase. Team up with your agent to disinfect and clean your home before and after people visit to keep everyone involved safe.
Several showing procedure suggestions include:
- Provide booties by the door.
- Establish a hand washing station.
- Have hand sanitizer readily available.
- Provide gloves and a basket for glove disposal, as well.
If you or someone you live with is at a higher risk for infection, you should consider a strategy to eliminate in-person showings such as selling “offer subject to interior inspection” or postpone your sale.
If any member of your household displays symptoms or falls ill during your home sale, disclose this information with your real estate agent immediately and postpone any visitations until the infected person meets the Center for Disease Control’s recovery standards.
Selling now could take longer than normal
Restrictions around COVID-19 may slow certain phases of the home selling process. Listing your home now requires extra patience and understanding in the face of inevitable delays. Here are a few examples of steps that may take longer in the present circumstances:
- Finding a buyer: If your market activity is slowing due to COVID-19 related concerns, there may be fewer buyers actively looking for homes.
- Clearing title and recording the deed: In regions where government recording offices are deemed non-essential, many offices allow electronic filings. However, ultimately a staff member must process the files so there may be a delay if the office is understaffed.
- Receiving your buyer’s mortgage approval: With title companies, notaries, and appraisers working remotely in many regions, the timeline for closing a loan may stretch longer than average. Additionally, some lenders are currently overwhelmed by refinancing requests due to low but shifting mortgage rates, leading to longer approval times.
Your contract may include a coronavirus clause
If you sell your home during the COVID-19 pandemic, your contract may include a coronavirus clause that permits closing extensions and home sale cancellations without legal or financial repercussions. For sellers, this means your buyer may leave the deal without losing their earnest money.
To protect your best interests, you can negotiate in what scenarios the buyer keeps their earnest money. Additionally, you can negotiate to set deadline extensions for specific dates to keep the sale on track to close.
Few will judge if your home sits on the market
In normal circumstances, homes that sit on the market above an average number of days are at a disadvantage. Homes with a high days on market count can carry a stigma — buyers wonder if the property has something wrong with it or if it’s priced incorrectly.
However, buyers and buyers’ agents are considerate of COVID-19’s impact on the market so they are unlikely to look down upon homes taking longer to sell. Some MLSs are even suspending or pausing the accumulation of days on market in order to accommodate for this slower period.
You can always change your mind
If you list your home and then are unable to follow through with the sale due to an illness, job loss, or other reason, you can cancel the transaction without repercussions so long as you include a COVID-19 clause in the home sale contract.
To avoid any extra charges from your real estate, review your listing agreement carefully to see if they charge a fee for taking your home off the market early. You can negotiate your agent’s standard agreement to reduce the length of the contract or waive fees; they may be particularly accommodating at this time.
Get an expert’s opinion — and go from there
Selling your home during COVID-19 is a personal decision. Spend some time considering how relevant financial variables, health concerns, and local government regulations will impact your home sale process.
For the best insight on how COVID-19 is affecting your local real estate market, reach out to an Assist2Sell agent in your area. Our team can help you determine whether your home is marketable at this time, answer any questions you have, and accommodate any special needs.
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