Virus affecting housing market
By TAYLOR BROWN
tbrown@yourmvi.com
When the coronavirus took hold in the Mon Valley in March, services deemed non-essential came to a screeching halt — including the real estate market.
Agents, buyers and sellers are in limbo as they wait for the OK to resume contracts and tour homes in person.
“Real estate getting shut down was similar to a freight train hitting a cement wall,” said Michelle Rollins, an agent with eXp Realty.
The real estate market always fluctuates, but each new year usually brings a flurry of activity.
“Every year we see a slight slowdown during the holidays, and on Jan. 2 the phone rings non-stop,” Rollins said. “We had that in January 2020 and it looked like we were having an early spring rush with the number of buyers calling in February.”
Rollins had nine clients go under contract in February and early March.
“These were clients relocating for work, first-time buyers, newlyweds, an estate home, a last effort to sell to avoid foreclosure, a divorce and a buyer who searched almost two years to find their family’s dream home,” she said. “Then we were told to stop all real estate activities without any guidance from the politicians who deemed real estate non-essential, which is not the case in most U.S. states.”
When the order was mandated, home inspections, closings and appraisals were canceled, leaving agents trying to figure out what to do.
“The first week everyone scrambled to figure out what was allowed and what wasn’t,” Rollins said. We got to a point where appraisals were done, final walkthrough seemed to vary by brokerage and closings happened with CDC recommendations in place. “
Still, no home inspections could be done.
“Buyers who did not yet have inspections done, myself included, needed to choose between financing penalties and issues that arise with rate-lock dates expiring and getting an inspection done,” Rollins said. “That is a high-risk decision and with all the stress of buying a home, business shutting down and everything the pandemic has to offer, it was tough.”
After weeks of scrambling, agents were told buyers who went under contract prior to a certain date were able to have inspections done.
“Buyers needed to make inspection decisions before their contingency period expires and we were given this guidance after that time,” she said. “To say it was chaos is an understatement.”
Walter MacFann, an agent with Berkshire Hathaway in Brownsville, said before COVID-19 hit the region, the market was strong.
“Interest rates were low and activity with buyers was high,” MacFann said.
At the time the shutdown was ordered, he was working with eight buyers. Now he has one.
“I am working with a seller, and we can’t close because they can’t obtain a payoff for the mortgage as the loan service company is based in India,” MacFann said. “As you may know, all of India is on lockdown.”
Such problems are creating problems on both ends of the spectrum.
“The buyer also wants to place a home on the market, but can’t risk not having a place to move to,” MacFann said.
Agents are no longer able to show homes in person, which has also slowed the number of listings posted.
“I have listed one property since the shutdown, but the paperwork was signed and pictures taken prior to the shutdown,” MacFann said. “I have several listings commitments with sellers as soon as the market opens.”
In the meantime, agents are trying to make it work.
Last week, MacFann and a seller had a virtual showing via Zoom.
“This virtual tour turned into an offer in which the buyer and seller settled on a price with the condition they can live tour the house shortly,” he said.
Rollins said even though virtual business continues, it creates a variety of problems.
“The only activities we can do during the shutdown is anything that does not require a face-to-face meeting,” Rollins said. “We can do buyer consultations virtually. We can do contracts electronically, which has been general practice for years. We can list a house, but we are not allowed to take photos, do any in-person staging or in-person room measurements.
“Spring is when sellers get their homes ‘selling ready,’ so without being able to have professionals take care of projects and without guidance on what projects to do, there will be a lag in housing inventory. I expect we will have a very competitive buyers’ market once we can begin showing houses again.”
For those still looking to buy despite the pandemic, the market remains buyer friendly.
“A few lenders I touch base with have stated that they are having problems with lower credit scores now,” MacFann said. “Typically we could work with a 620 credit score, but now the secondary market is not buying loans in this range. Rates are low and credit is available for stronger credit scores.”
While all parties have tried to adapt during the pandemic, many agents are personally struggling.
“For us as agents, it is a tough change as your opportunity to make a living has stopped,” he said. “I had six closings in the pipeline prior to the shutdown and we closed five of them with little challenge.
“We lost one buyer who lost his job and terminated the agreement.”
Rollins said it takes time to see commissions from a sale.
“In our industry we are 100% commission based and the time it takes to see a dollar from any work that is done can take a minimum of 30 days in the best of situations,” Rollins said. “That would be having someone call who buys the first house they look at and does a quick close. Not a typical situation.
“In my experience, we see our commission 90 to 180 days after the first phone call most of the time.”
When the OK is given to resume “normal” showings and operations, it will be months before agents see any income.
“When we are granted permission to help our community meet housing needs again, it will take months just for money to start coming in,” Rollins said. “Factor in the time it takes to ramp up and the time it will take to get caught up financially, most agents may start to feel normal again by the end of the year if we can go back to work this month.”
Marie Slagus, an agent with Howard Hanna Simon Real Estate Services in Rostraver Township, predicts the market will bounce back after COVID-19.
“Unfortunately, since we are on Gov. Wolf’s non-essential list we had to stop meeting with individuals in person. However, our office has adapted and is doing showings and listing properties virtually,” she said. “The market was an amazing market prior to COVID-19 and I feel we will return to this type of market, but I think we will continue to do a lot of things virtually.”
She said agents with Howard Hanna Simon Real Estate Services have continued to list and virtually sell homes during the pandemic, but she misses interacting in person with her clients.
“I am missing the face-to-face meetings with clients,” she said. “Luckily, technology has been very helpful in overcoming this challenge.
“I am staying in touch with clients, following up with new leads and enhancing my technology skills.”
She said while in-person transactions and interactions have stopped, buyers and sellers can continue searching for homes.
“While both buyers and sellers are frustrated with not being allowed to view or show homes, at this time the best option is to take advantage of homes being shown virtually and stay ahead of the curve by putting your house on the market or get an offer in on a house that’s currently on the market,” she said.
It’s the perfect time for sellers to prepare their homes.
“If your house is ready, now is the time to put it on the market,” she said. “Inventory is low and buyers are ready to buy.”
For buyers, offers are still being accepted.
“Contact a loan officer and obtain a pre-approval letter, then start looking at homes virtually and put an offer in to secure home,” Slagus said.
When the market is back up and running in person, things might be different.
“I feel buyers will be more cautious going through other people’s homes and sellers will most likely do a thorough cleaning after people have been through,” she said. “I personally want to respect sellers’ property and ask buyers to wear masks and minimize touching door knobs, doors, etc.
“I wish I could predict the future; however, in time the housing market will surpass the mark at which we left it prior to the quarantine. “
While the waiting game continues, she said everyone can benefit by being patient.
“Patience during this time is extremely necessary,” she said. “ Try to realize that the current state of the world is temporary. I think the market will be strong in the foreseeable future and individuals should be ready to sell or buy.
“As this unique time passes, and it will, I truly do believe that many houses will come on the market and the sellers will be excited to have potential buyers come through their homes. The excitement that sellers have will likely be equivalent to that of the buyers, who have been anxiously awaiting the opportunity to tour homes in person.”
Roscoe resident Jennifer Downes Todd said the virus has complicated her experience.
“I am trying to sell my brother’s home, who passed away in November,” she said. “We spent all winter working to get it ready for the market, and the week we were ready all of this happened.”
Todd’s niece, Melissa, inherited the house and Todd is helping with the sale.
“My niece and her husband inherited the house when my brother passed away and it was in need of many repairs,” Todd said. “I am the executrix of my brother’s will and helping with the sale.”
The family worked to clear all the furniture from the house, remodeled the kitchen with new flooring and appliances, installed new drywall ceilings in the living room and dining room, painted, remodeled the bathroom with a new vanity, toilet and flooring, replaced electrical outlets and switches, painted and cleaned the outside foundation and fixed up the basement.
MacFann met with the family March 21 to sign papers before all in-person transactions came to a halt.
“We had no chance to even have showings, open house or for anyone to see the property since,” Todd said. “Everything is done and still sitting empty, while we continue to pay all the utility bills and homeowners’ insurance.”
While frustrated, the family is hopeful.
“We are hoping when Pennsylvania reopens, even slowly, that people will be back in the market for new homes,” she said. “We hope that people are allowed to see properties with their agents and that banks will be able to help with applications for loans and that inspectors and appraisers will be able to do their jobs.
“We just want a chance to have people see all the work that’s been done and maybe pick this house for their new home. It has a lot to offer for first-time buyers, small families, single people or even older people looking to downsize.”
Agents are encouraging buyers to get their pre-approvals and start virtually touring properties, while sellers should make sure their homes are ready to hit the market when the time comes.
“This will be a bump in the road for 2020,” MacFann said.