The phrase “May he live in interesting times” is purportedly an ancient Chinese curse. I don’t know if that is true or not but we are definitely living in interesting times. It’s impossible to turn on the TV or radio and not hear the latest coronavirus news. It is a bit overwhelming and can be depressing. I prefer to focus on the positive and those items where we can be proactive. To that end, I thought I’d address the areas that are important to us as real estate professionals
How do I market? Interesting times bring interesting innovations. Since open houses are not going to work if no one shows up, many brokers are looking for different ways to present houses such as virtual tours. You can also use Facetime or Zoom to show a buyer a home.
Can buyers get financing? The markets have definitely been a roller coaster of late but the good news is that rates appear to be settling down. The money is there and the Feds have lowered lending rates to their clients. This means your clients with good credit scores can still get a good rate. Bill Ezell of Guild Mortgage says turn around times is still around 30 days.
Should I tell the buyer that the owner had COVID-19? Under Colorado law, you must disclose any adverse information to the buyer. This includes disclosing if the seller had a documented case of coronavirus. Right now it is believed that the virus can remain on surfaces for a period of time. I have seen many different ideas on the length of that period of time. This could change as we get more information on the virus but for now, it is safer to address it. Some buyers may be upset by this information but most buyers understand they may have to do a thorough cleaning before they move in. If the seller thought they might have had the virus but was never tested then it’s more of a gray area.
What if my client wants out due to coronavirus concerns? I am not an attorney so this area is only suggestions. Jon Goodman of Frascona, Joiner, Goodman and Greenstein, a real estate oriented law firm has recently addressed this though. He says if your transaction is under contract then this is a tricky area and it is probably best to first advise your client to seek the advice of their attorney. For those clients that persist then what you do depends on what point you are at in the transaction. If the client wants out before the loan termination date, then they have the most clout and could pursue termination. If the contract has passed the loan termination date, then the buyer’s clout is reduced so Jon Goodman feels it is best if they stay in the contract. If you have passed the loan termination date then my suggestion would be to offer to have their house thoroughly cleaned by a professional cleaning service.
Is there a contractual way to protect my client? In some cases, your transaction may come to halt because of some issues such as the inability to do an inspection. Your client may still want to proceed. DORA has developed a form to “pause” the transaction until the issue can be resolved.
What do we do about Inspections and Appraisals? With the whole state requiring people to shelter in place, it has put some limitations on certain aspects of our business. The good news is that Inspectors are covered under the essential services section of the Financial Industries guidelines. Even better, FHLMA and FNMA have authorized the use of drive-by appraisals. At this time, FHA and VA are not allowing drive-by appraisals. This may change soon.
What about closings? Title companies and notaries are also exempt from the shelter at home requirements imposed by many counties as they are considered essential businesses to maintain the financial industry. One of the good things that have come out of the requirements to social distance is the innovations many industries are putting in place. Title companies have found that they can manage closings in a variety of ways. Some are spreading out their closings so they have time to disinfect between appointments. Some are setting up drive-by closings with clients signing the actual documents in their cars.
The bottom line is that we all need to take the appropriate precautions but we will get through this. We had pent up demand before the coronavirus and we will have that same demand once the contagion is under control. In the meantime, we will need to be able to adapt and I expect we will see lots of innovative ways to sell and buy homes!