Home-Buying FAQ: Your Top Questions About Purchasing Property During the Coronavirus Pandemic

On June 1, 2020   /   Home Buying  
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By Margaret Heidenry

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, you no doubt have a lot of questions—about whether it’s possible to buy or tour a house now, COVID-19’s impact on home prices, and more.

We’re already written a guide to home buying in the age of coronavirus to help you navigate this new reality in real estate, but we know there’s a lot you still want to know. So here are the answers to your most pressing questions about buying a home right now. Whether you’re wondering what’s up with home prices or open houses, read on to learn everything you need to know.

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. (State orders, however, may overrule that guidance.)

Furthermore, the real estate industry has quickly adopted new technologies to help home buyers and sellers stay safe for as long as this pandemic lasts.

However, certain aspects of the home-buying process might be restricted or look a bit different these days. For instance, as COVID-19 outbreaks gained momentum, certain hard-hit states (such as New York) banned in-person home viewings. And while home closings typically involve the presence of the buyers, the sellers, their agents, and a notary, some states (such as Florida) loosened restrictions and allowed remote or “curbside” closings, where documents are slipped through car windows to lower the exposure levels of all parties involved.

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

A local real estate agent will have the best handle on what home buyers can and can’t do in your area, so feel free to consult an agent for the most up-to-date information. Here’s more information to help you answer the question, “Should I buy a house now?”

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 in your area, 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, in most real estate markets, home inventory remains very tight.

“I don’t expect the slowdown to be like the last recession where prices fell,” says realtor.com chief economist Danielle Hale. “There are more than enough buyers out there to keep home sales from slowing in any major way.”

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.

Here’s a breakdown of how to negotiate an offer on a home in the age of coronavirus.

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.

First, you can find local real estate agents online and interview them virtually. While showings may not be easy to arrange because of shelter-in-place orders or continuing health concerns, most real estate listings now offer virtual tours.

When possible, video chats allow agents to walk through a prospective home while you watch from the safety of your current residence. Virtual tours may not be as good as walking through a home, but they can give you a good idea of whether or not you want to see the house in person when it’s possible. And it’s also a great way to pare your options and skip visiting some homes.

When it comes to the financial aspect of home buying, many lenders had already made the entire mortgage process digital long before anyone heard of social distancing.

Another new term? “Desktop appraising,” which allows the appraiser to stay home and review available data that allows lenders to approve mortgages remotely.

And in many states, drive-through or even video closings are temporarily permissible during the pandemic.

Remember, whether all of the above is available depends on your area, so always consult with your agent each step of the way. And read more on whether or not it’s safe to buy a house now.

5. Are open houses or home showings allowed?

Whether open houses are allowed in your area all comes down to how local authorities enforce their lockdowns. Under many quarantine orders, such as in Los Angeles and New York City during the height of the pandemic, open houses have been completely banned. Other states currently allow open houses as long as capacity allows for social distancing. The National Association of Realtors® offers guidelines on open houses, recommending that they be limited to fewer than 10 people, if they’re hosted at all.

In general, in areas where open houses aren’t allowed, individual home showings with just a buyer and an agent are OK. Keep in mind that even if showings are allowed, agents and home sellers must all be willing to make them happen. Check with your agent and local government for more information, and know that what’s permissible could change as this pandemic progresses.

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. Here’s more on how to stay safe during your house hunt.

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. And according to realtor.com senior economist George Ratiu, the comfort level of buying a house sight unseen may come down to age.

“Younger cohorts are more inclined to rely on detailed photos, virtual tours, or live video instead of an in-person visit, with 31% indicating they would be willing to buy sight unseen,” says Ratiu.

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. Closing times used to average about 26 days in January, then hit 43 days in February, and shot up to 60 days in March. They’re likely to take longer still in the coming months.

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.

Still, while moving is legal in the big picture, it might not be allowed for your specific circumstances depending on what stage of the pandemic you are in. For instance, during the height of New York City’s epidemic, some apartment buildings decided to ban residents from moving due to safety concerns and shelter-in-place orders.

Check with your local and state governments (and your HOA or condo board, if applicable) before scheduling any move. And if you have to move, read all about how to move safely during the coronavirus pandemic.

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.
  • 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: On real estate sites like realtor.com you can see what properties are available in your area in your price range. And take advantage of the virtual tours many agents are offering to house hunt from your couch.
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5 Reasons It’ll Pay to Sell Your Home Early in 2018

On January 15, 2018   /   Selling a Home  
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By: Holly Amaya

It’s been nearly a decade since the Great Recession delivered the worst housing crash in modern memory. But these days, the fallout feels squarely in the rearview mirror. Markets have bounced back with fervor, and confidence is skyrocketing: From Charlotte, NC, to Stockton, CA—and everywhere in between—homes are flying off the market at record prices, and buyers are still clamoring to get in the game.

One thing is clear: It’s a great time to be a seller.

“We’ve seen two or three years of what could be considered unsustainable levels of price appreciation, as well as an inventory shortage that resulted in a record low number of homes for sale across the country,” says Javier Vivas, director of economic research for realtor.com®.

In other words: Today’s buyers are exhausted. And in many cases that means they’re willing to sacrifice to get a toehold in the market.

Sounds like the stuff of seller’s dreams, right? But know this: If you plan to sell in 2018—and you want to unload your home quickly and for maximum money—your window of opportunity may be rapidly narrowing. Here’s why you should get moving ASAP.

1. Rates are still historically low, drawing buyers into the market

We may not be enjoying the rock-bottom interest rates of yore, but by historical standards, today’s 30-year mortgage rates—hovering just above 4%—are still low. And experts agree mortgage credit will remain relatively cheap for most of the year.

That means the getting’s still good for buyers—and, subsequently, for sellers looking to unload their homes.

But rates are on the rise, and it’s been widely predicted that they’ll reach 5% before year’s end. Buyers know that the longer they wait to buy, the more expensive it will be.

Roughly translated, that means you’d be wise to list your home earlier in the year, before more rate hikes kick in. Not only will you capture the market of buyers scurrying to close a deal, but if you’re buying after you sell, you’ll also benefit from those lower rates.

2. Inventory remains tight—and demand high

Simply put, there are more buyers than available homes—particularly in red-hot markets where land is scarce and it isn’t cheap to build.

And the housing shortage will likely get worse before it gets better: Realtor.com data predict inventory will remain tight in the first part of this year, reaching a 4% year-over-year decline by March.

Sellers, that means this is your opportunity to be wooed. Buyers, their choices limited, are going to great lengths (and making some major concessions) to win the house, says Katie Griswold, a Realtor® with Pacific Sotheby’s in Southern California.

“We’re in a very favorable seller’s market,” she says. “We’re seeing bidding wars—which push up prices—and buyers are submitting offers with very pro-seller terms, like forgoing the repair request or waiving the appraisal contingency.”

And cash investors are in the mix, too, accounting for 22% of all home sales transactions in November 2017 (up from 20% in October), according to the National Association of Realtors®.

Those cash buyers are snapping up homes in an already tight market and keeping some first-time buyers at bay (sorry, buyers!). But if you’re selling, you stand a better shot at an all-cash offer—one you just might be crazy to refuse.

Of course, there’s a catch: Inventory levels are predicted to begin rising in the fourth quarter, marking the first inventory gain since 2015 and setting the stage for more dramatic housing gains to come. So if you’re thinking of selling, start preparing now in order to walk away with a sweet paycheck.

3. Home prices are still increasing

From coast to coast, home prices continue to rise—which translates to more money in your pocket when you sell.

But the gains are predicted to be more moderate than in years past. Realtor.com data suggest a 3.2% increase year over year, after finishing 2017 with a 5.5% year-over-year increase.

Bottom line: You still stand to make a pretty profit if you sell this year, but the earlier you can list, the better off you’ll be.

4. People have more money in their pocket

Record levels of consumer confidence, low unemployment, and stock market surges are setting the stage for high home buyer turnout in 2018. For the first time since the 1960s, the Fed has projected that the unemployment rate will drop below 4%, and the domestic stock market is enjoying a nearly unprecedented rally.

The housing market is already reflecting this boom: Existing-home sales soared 5.6% in November 2017 (the most recent month for which data are available) and reached their strongest pace in almost 11 years, according to the NAR.

“Incomes are growing and people are finding better and more stable jobs,” Vivas says. Buyers “are feeling pretty good about (their) finances.”

And thanks to the GOP tax legislation, which nearly doubles the standard deduction, we’ll see fewer people itemizing, says National Association of Home Builders Chief Economist Robert Dietz.

“The income effect of that is that most people are getting a tax cut—which should help (buyer) demand,” Dietz says.

All of these factors combined mean more buyers could be on the hunt, with more money in their pockets to shell out on a home for sale—possibly yours!

5. Millennials are ready to commit

Millennials, often crippled by student debt, have been especially hampered by rising interest rates and high home prices.

But the aforementioned conditions are ripe in 2018 for these first-time buyers to take the plunge, and experts predict that millennials will make up a vital part of the buyer pool over the coming year: Millennials could account for 43% of home buyers taking out a mortgage in 2018 (a 3% year-over-year increase), according to realtor.com data.

“As people move into their 30s, they’re looking to move from renting to homeownership,” Dietz says. “And we predict that trend will continue even more this year.”

More home buyers flooding the market can only mean good things for sellers—at all price points.

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Get Moving! 4 Urgent Reasons You Should Sell Your Home in 2017

On February 27, 2017   /   Selling a Home  
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By: Lisa Gordon

If you’ve been sitting on the fence about selling your home, it might just be time to hop off. Now. To put it in other terms: 2017 is poised to be the year of the home seller, real estate experts say. So what are you waiting for?

“Sellers have been in the driver’s seat for the last two years, but this year is shaping up to be even better for several reasons,” says Jonathan Smoke, chief economist of realtor.com®. “Nothing is bad for sellers today.”

A combination of factors is coming together to make 2017 a prime seller’s market for most of the nation. Here’s what’s driving it:

Reason No. 1: Mortgage rates are still low

It’s all about rates, baby. Low mortgage rates translate to lower monthly costs. Lower costs entice buyers, which is good for sellers.

Although mortgage rates have been ticking up since mid-October to slightly over 4%, the rates for a 30-year fixed mortgage—the most popular home loan—are still hovering near 30-year lows. For now.

“We expect them to hold at this (4%) level for a while and continue to adjust up,” says Danielle Hale, managing director of housing research for the National Association of Realtors®. “Mortgage rates rarely move in a straight line. They could be in the 4.6% to 4.8% range by the end of the year.”

What does that have to do with home sellers? Well, potential buyers who are armed with that knowledge might hustle to close on a home before a rate hike.

What if you’re nowhere near ready to put your house on the market? That’s OK. Even if rates nudge up by the end of 2017, they’re still expected to be low enough to seduce buyers. The tipping point is when rates reach 5%, experts say. That’s when they could put the brakes on the robust real estate market.

“If they go above 5%, we’re going to see home prices come down,” says Trevor Levin, a real estate agent with Nourmand & Associates in Los Angeles.

Reason No. 2: Inventory is shrinking

Remember in Econ 101, when you learned that low supply and high demand lead to rising prices? The same is true—in spades—for residential real estate. When inventory shrinks, available homes become more valuable. As Martha Stewart would say, that’s a good thing for sellers.

Let’s put it in perspective: In 2007, just before the housing crash, existing home inventory peaked at 4.04 million homes for sale, according to NAR data. Fast-forward to November 2016: There were only 1.85 million homes for sale, 9.3% lower than the year before—and a whopping 54% lower than the 2007 peak.

“Quite simply, sellers this year have the least competition,” Smoke says.

And get this: Not only are there fewer homes for sale, but the time those homes have spent on the market has decreased year over year as well. If priced correctly, the typical home should move quickly, Smoke says. And that’s another boon for sellers.

“Many potential sellers don’t want to think about having to prep a home for showings and deal with an indefinite period of having to keep things in perfect shape,” he says. “Fast-moving inventory limits that pain.”

Reason No. 3: Home prices are rising

Lower inventory and greater demand have pushed up home prices. The median existing-home price in November 2016 was $234,900, up 6.8% from November 2015, when it was $220,000, according to the NAR. And that’s no fluke. That was the 57th consecutive month of year-over-year gains.

Higher prices particularly benefit the seller whose property value plunged during the recession, sometimes to less than he owed. Thanks to rising prices, many homeowners whose property was underwater can now sell without suffering a big loss.

“2017 will be a rare ‘balanced market’ for buyers, because even though mortgage rates are edging up, many sellers have recovered enough equity to be able to afford to sell,” says Colby Sambrotto, president and CEO of USRealty.com.

Reason No. 4: Job markets are strengthening

As unemployment decreases and wages (finally) increase, consumer confidence will climb. Increased confidence will spur buyers to jump into the market—which is, you guessed it—more good news for sellers.

These pieces of the puzzle create a “virtuous cycle,” Smoke says. It’s not a term he coined, but it’s one he hasn’t had a chance to use in many years.

“These things are all connected,” Smoke says. “If people are confident, they’re more likely to buy big-ticket items like houses and cars. And then they spend more money on other things. It reinforces the economy, creating a virtuous cycle.”

The only ‘bad’ news for sellers

If you sell your home today, you mostly likely will buy another. Then, all the economic factors that worked in your favor as a seller will work against you as a buyer.

Sellers have a few options. You can rent for a while, and hope that prices come down in the future. But whatever you save on the price of a house you could surrender when mortgage rates climb to 6%—as predicted for 2019 and 2020, Smoke says.

The take-home lesson: Don’t wait, because mortgage rates won’t.

“There are opportunities for a seller-turned-buyer who wants to downsize in this market,” Smoke says. “You can lock in financing rates that you’ll never see again, and very likely make the trade-off work.”

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