As spring homebuying season approached this year, Mike and Tammy York of Lompoc, California, listed their house for sale and started looking for a home to buy in Bakersfield, California, where they want to retire.
But then the coronavirus outbreak called everything into question. When the governor of California issued a statewide stay-at-home order March 19, the Yorks wondered if they were stuck.
"We thought, 'Now what are we going to do?'" Mike York says.
Welcome to today's real estate market, where many ask if it's still possible to buy or sell. As the Yorks have found, the answer is yes, though the process includes some new challenges.
"There are people out there buying and selling real estate," says Jeanne Radsick, president of the California Association of Realtors and a real estate agent with Century 21 Jordan-Link & Co. in Bakersfield. "But it's not just business-as-usual."
Government social distancing regulations vary by state, county and city. Some states never instituted stay-at-home orders. Others plan to reopen soon, and still others have not set a date to end strict shelter-in-place requirements. Rules about whether real estate is an essential service during a stay-at-home order also vary.
If, like the Yorks, you want to sell or buy a home despite the pandemic, here are some of the things you may encounter.
Stricter credit requirements for mortgages
Some lenders have set stricter criteria for mortgages during COVID-19, which means borrowers with lower credit scores and smaller down payments may find it harder to qualify.
The availability of mortgage credit dropped 16% in March to its lowest level since June 2015, according to an index calculated by the Mortgage Bankers Association. A drop in the index indicates that lenders are tightening their standards.
That doesn't mean you can't qualify for a mortgage amid the coronavirus outbreak, but you may have to shop a little harder.
Video-only home tours
Open houses are not allowed in many locations and are strongly discouraged in others. Buyers and sellers are instead relying heavily on virtual tours, which let people see inside a home via online video.
In some cases buyers are making offers without setting foot inside homes, Radsick says.
When physical showings are allowed, they often require extra caution. The Yorks wore gloves, masks and didn't touch anything when they looked at a home in Bakersfield. The seller opened all interior doors so they could see inside rooms and closets. The Yorks did the same when showing their home in Lompoc.
"The safety protocols for physical showings are now as much a part of the negotiation process as price," Cindi Bulla, chairman of the Texas Realtors association and a broker with Realty Central in Amarillo, Texas, said via email. "The buyer, seller and brokers, using CDC [Centers for Disease Control and Prevention] recommendations as a minimum starting place, all decide how and when the property will be safely shown."
Drive-by home appraisals
A home appraisal is usually required to get a mortgage. Normally, an appraiser will tour the home to assess its condition as part of the evaluation. Now lenders are allowing some alternatives so appraisers don't have to go inside, says Andy Alloway, president-elect of the Nebraska Realtors Association and president of Nebraska Realty in Omaha, Nebraska.
With so-called desktop and drive-by appraisals, appraisers use market research and other data, plus photos and exterior views, to estimate a home's value.
Traditionally buyers and real estate agents attend the home inspection so they can follow the inspector around and ask questions on the spot. But in locations where they're still allowed to work, many inspectors are going through homes by themselves and sharing photos, video and reports with clients.
If you're buying a home, make sure nothing gets lost in translation. Review the materials carefully and ask questions about anything that's unclear.
If you’re selling, talk with your inspector about what precautions they’ll take to prevent the spread of the coronavirus. The American Society of Home Inspectors, a professional association, advises its members to use hand sanitizer before entering homes, wear disposable shoe coverings, wash hands after inspecting each bathroom and kitchen and wipe bathroom and kitchen fixtures with sanitizing wipes after inspecting those areas.
Home purchase agreements usually outline penalties for not meeting deadlines or for canceling the deal. Many real estate agreements now include clauses to shield buyers or sellers in case they have to delay or cancel because of coronavirus-related issues. These addendums may address such things as the unavailability of inspectors or appraisers, a buyer's inability to travel to sign documents, or business or government closures, according to the National Association of Realtors.
In some states online notary options and electronic deed filings for closings are allowed. But these digital options are not widely adopted everywhere, so documents still often need to be signed in person.
Before the coronavirus outbreak, real estate agents typically attended closings with buyers and their families. “It was a joyous experience,” Alloway says. Now closings are quieter. As many documents as possible are signed electronically and only the essential people are at the closings, he says.
The setting has also changed.
"We are performing real estate closings outdoors, through car windows, or one masked person at a time passing documents 6 feet across a long table," Bulla says. "We are just making it work."
Tips for buying or selling a home now
Buying or selling during a pandemic isn't for the faint of heart. "It has been kind of nerve-wracking," Mike York says, especially when combined with planning a big move and retiring soon.
But the details are falling into place for the couple. They accepted an offer on their home in Lompoc, and a seller has accepted their offer on a home in Bakersfield. They look forward to the transactions closing in May.
Here are some tips if you're thinking about buying or selling now:
Carefully consider whether you're financially and emotionally ready to buy a home and whether you need to move right now. It may be better to postpone if you're just toying with the idea or worried about losing your job. "It's a needs-based thought process," Radsick says.
Shop at least three lenders to find the best rates and get preapproved for a mortgage before you start looking for homes. Know that lenders are also grappling with the effects of COVID-19, and the process may move slower than normal.
Don't be surprised by a competitive market. There may be fewer buyers out there, but there are also fewer sellers. "We're still seeing multiple offers because of a severely low inventory," Alloway says.
Stay updated on state and local regulations and be prepared for a process that looks different from business-as-usual.