Selling a home during the Shelter in Place - Thoughts to Consider
We have been locked down for about five weeks already. What is going to happen to the housing market in the near future and how does that affect me if I’m trying to sell a home today or in the near future?
That is a somewhat rhetorical question but since I work in the world of Real Estate, allow me to offer some opinions on what to consider as the next few weeks pass us by.
Question #1. Should I sell right now? Or within the next month or two? I recently wrote an article on some considerations to make when purchasing a home and today I offer some thoughts about selling. I’ll admit, there are more arguments to purchasing but selling is an option now as well.
A. In some respects, the current market is similar to purchasing during the Holiday season which generally runs from November 25th to around January 25th. As we know, there are far fewer homes on the market and fewer buyers for those homes, but those that are selling are usually very serious and plenty of good deals have come together during the Holidays. This is exactly what I said in my last article and it still rings true now that we are five weeks into the Shelter in Place. Market statistics will vary by region but a common theme is the reduced number of listings on the market. I believe there are fewer buyers as well but I also think those buyers who are waiting for a market crash in the future are making a big mistake. I believe the best deals are to be made right now. So, if you are selling, I recommend holding out for the best buyer client to submit an offer on your property.
B. Local MLS restrictions vary but most of the areas have restricted showings to only vacant properties. This creates a major challenge for sellers who still live in the property, however, a good Real Estate agent can find ways to still show the property to prospective buyers. This can include Virtual Tours, Facetime calls, photo reviews plus buyers can usually drive by a home to see what the location is like. I often find myself telling clients “a little money can usually fix property defects, but you cannot fix your neighbors or where the home is located.” Although it is difficult to make decisions about purchasing a home after only seeing it “virtually,” I have been able to find creative ways for clients to view properties and I’ve already sold two occupied properties since the Shelter in Place started. So if you are a seller, lets talk about opportunities and how your home can best be shown during this strange time
C. Although it’s tempting to think there will be great opportunities to get a good price on a home, I’m finding the market to still have multiple offers when a home is priced aggressively. Likewise, a home priced incorrectly will be completely ignored, even with the reduced inventory levels. I should also note the changes in the Jumbo lending market as well as the troubles in the sub-prime lending markets. Therefore, if you are selling, it is more important than ever to follow up with the buyer’s lender to find out the status of the loan application along with any issues related to funding the mortgage. Now, more than ever, is when an agent’s reputation will help deals come together. I understand there are some great newer agents, but experience can be a big advantage during this market. Experienced agents have seen troubling times before and know how to navigate better.
D. Another big consideration to selling is understanding what is happening in the world of appraisals. Due to volatility in mortgage interest rates, most lenders have been overwhelmed with refinance applications. This is putting pressure on lenders and appraisers to get the reports back timely but with the recent changes in the mortgage markets, appraisal reports are being more closely scrutinized. This has led to low appraisals and difficulty getting deals to come together. For sellers, it is critical to understand and accept the condition and location of your property and realize it may not generate the same kind of demand that existed just a few months ago. Plus, the opportunity to improve the property has become more difficult though there are still things the Compass Concierge program can help sellers to do a home. The Concierge program is something I will discuss in future articles and it allows owners to improve a property to generate a higher resale value.
E. The bottom line to sellers relates to the reasons for selling. If a client needs to make a change due to a new job, or because of a change in family status or due to financial reasons, then I believe this is a great time to sell. However, if a client just wants to see if it’s possible to sell for a high price, then I cannot be sure the outcome will be successful. I think that type of seller will have more success once markets turn back to a more normal place.
F. And will the markets get back to normal? I’ve read dozens of reports and listened to all sorts of experts talk about what the future may bring for the housing industry. I’m not necessarily thinking things will just jump right back to the way it was, but I also don’t think there is a cause for alarm regarding home values. Even with increases in the unemployment rate, most homeowners have a large percentage of equity in their houses and are not on the brink of foreclosure. I also believe the government may step in to push banks to avoid foreclosure proceedings in the event homeowners fall behind by a few payments. The exact way it will work isn’t known, but we are not looking at a big drop in values and we most certainly are not going to repeat the recession of 2006-2008. On the other hand, if we drop into a Country wide depression that does not correct itself quickly, then we could be in territory we have not seen in our life-time.
The summary statement to all of this is to say it is definitely a good time to sell a property although, there are some additional challenges which need to be addressed. But if I client is patient and understands the market as it stands, I believe there is an opportunity to come away with a very nice return on a sale. Some of the better homes receive multiple offers, and that usually leads to a good sales price – provided the sales price is supported by a favorable appraisal.
In the meantime, please stay inside and please stay as safe as possible and remember that I’m still working during this crisis.
A home purchase is both an emotional and financial transaction. With proper planning and skill, finding the perfect property or selling your home, can be done regardless of the economy and status of the housing market. Good things come to those who work with the best Real Estate agents.
Michael Delehanty – San Francisco area Real Estate Compass – Walnut Creek Email: [email protected] Phone: 510.697.3900