COVID Completely Transformed The Way We Buy Homes But Will It Stick
Remember lazy Sunday afternoons when home buyers could leisurely hop from open house to open house, partaking of wine and cheese laid out to reel in more foot traffic—the more the merrier.
Much can change in a year.
On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, triggering a wave of lockdowns that dramatically changed our lives in countless ways—including how we buy and sell homes.
Still, now that vaccines are becoming more widely available and life soon promises to resume some semblance of pre-COVID-19 normalcy, home buyers and sellers might be wondering: Will the old ways of real estate return, too?
On the advent of this surreal anniversary, we thought it fitting to look at all the ways the pandemic has changed residential real estate transactions—and why many of these adjustments are likely to stick around for good.
Over: Large, lavish open houses
Pre-pandemic, holding an open house was often akin to throwing a party, with some brokers spending tens of thousands of dollars to throw buzz-worthy events complete with Champagne, live music, and more.
Yet once COVID-19 precautions prohibited large gatherings in enclosed spaces, this glitzy breed of open house quickly disappeared. Instead, buyers weren't even allowed to visit homes; but if they were, they did so individually, by appointment only—encased in masks, gloves, and booties.
While poking heads in closets and checking water pressure was once par for the course, pandemic buyers were discouraged from touching doorknobs and faucets, lest they leave traces of the coronavirus behind.
While the legendary open houses before COVID-19 were certainly fun, they aren't likely to return in their usual splendor—which is fine by many real estate agents, since these epic events attracted tons of looky-loos who had a low probability of actually making an offer.
"To me, it's a gift," says Michelle Schwartz of The Agency in Los Angeles. She adds that most agents agree that individual showings are a far safer and efficient use of time, as it narrows down visitors to those who are more serious about buying.
Schwartz adds that this more modest approach has also tamped down on people entering the home for more nefarious purposes, like stealing belongings,
"This has reduced the sellers' fear of putting their most prized possessions on display to the public," she explains.
More subdued open houses will likely return as pandemic precautions are removed, but "don't touch" provisions and requirements of always having a real estate agent or representative with you are likely to stay in place.
Here to stay: Virtual home tours
Given home buyers couldn't tour homes in person easily during the pandemic, technology ramped up to allow them to check out homes in other ways. They include video tours (where a real estate agent shows a home remotely to buyers on a live video steam), virtual open houses (same as above, but to numerous buyers simultaneously), and 3D virtual tours (where buyers click through an interactive, 360-degree view of a home on their own).
A year ago, virtual viewings were a safety precaution. But since then, they've become a beloved convenience among buyers who adore checking out homes from the comfort of their couch. As such, this relatively new technology is no doubt here to stay, and will only become more sophisticated over time. (Think: virtual reality headsets with which you can "walk" through a house.)
“Virtual showings through 3D videos have revolutionized the way our industry does business and likely will continue to do so,” says Kirste Gaudet, broker for @properties in Chicago. “The 3D tours are so realistic that we may be able to put open houses to rest. I find that my clients now want them as part of the marketing effort.”
Aside from the convenience, virtual tours help home buyers quickly and easily narrow their options to a few houses they might like to actually visit.
"Ideally, most people want to see a home in person before they buy, but virtual home tours certainly help them reduce the number of homes they have to spend time and effort touring," says Josh Judge of Berkshire Hathaway HomeServices/Verani Realty in Southern New Hampshire.
Here to stay: Greater comfort with sight-unseen offers
Most people used to shudder at the thought of making an offer on a house without seeing it in person, and most experts advised against it. But the pandemic has persuaded many to take that leap of faith.
"Now the average home buyer is more inclined to buy a property sight-unseen," says Lance Kalfeltz, a broker with LV RE Services in Las Vegas. "Being able to work from home allows them to live almost anywhere, and it's not always convenient to tour a home before buying it."
Kalfeltz points out that in hot markets like his—where many buyers are making an exodus from Orange County and Los Angeles—by the time a would-be buyer got on a plane (which many were reluctant to do over the past year) or made the drive, the property would be gone.
Besides, unless they agree to an "as is" contract, buyers are most often allowed to back out of a sale if the property doesn't pass inspection. As such, sight-unseen offers aren't as risky as they might seem, which is helping more buyers feel comfortable enough to go for it on homes they're admiring via the many virtual viewing options they now have at their disposal.
Here to stay: Remote closings
In the past, closing on a house was one moment when all parties gathered together in an office to sign paperwork, swap keys, shake hands, and be off on their merry way. But no more!
During the pandemic, "drive by" or "drive up" closings became common, where you'd sign papers sitting in your car, while a masked and gloved runner delivered papers back and forth.
Odds are, remote closings are here to stay, and may even be doable from home. In some states where remote online notarizations are permitted, all documents can now be signed through an approved online notary platform (e.g., Notarize) or audiovisual portal (e.g., Microsoft Teams).
And in the many states where only professionally witnessed ink signatures will do, lending officials may send a notary public to the buyer's residence or place of business. Although this convenience might cost extra, many buyers seem happy to pay for it.
"I have one client who lives about two blocks from the escrow office, but still opted to pay the $125 extra to have a notary come to his house," says Kalfeltz.
Over: Desktop appraisals
For all the changes that seem here to stay, there are some aspects of residential real estate transactions that will likely revert to the way they were done before the pandemic, like desktop appraisals. This is where a home appraiser assesses the value of a home merely by looking at it online. However, banks, buyers, and sellers don't seem to be consistently happy with this practice, as important details can easily be missed this way.
"It's impossible to assess the value of the neighborhood and the position of the house within it when you're doing a remote appraisal," says Schwartz.
Also, one bad camera angle on an online photo can unduly influence an appraisal by thousands of dollars, and keep a loan from going through. No one wins in a situation like that.
Post a Comment