Over the past few days, we got a lot of questions from our clients and friends on what exactly are the impacts? Let’s talk about it!
What Is Happening in the Bay Area
On March 16, 2020, Bay Area ordered ‘shelter in place for all residents to curb the rapid spread of COVID-19 across the region. Only essential businesses open in 6 counties. 4 days after, on March 20, California Gov. Gavin Newsom’s order marks the first statewide mandatory restrictions in the United States to help combat the outbreak.
Just about the same with other industries, real estate can’t get away with being affected by ‘shelter in place’ and the COVID-19 pandemic. Here are some FAQs:
Stock Market Has Been Volatile, What Does That Mean to Real Estate?
We believe there’s a small chance the housing market will crash and slaughter in half, and an even smaller chance it will shoot up and price out everyone again. Instead, most likely, to our own belief, we might see a decline in price before it bounces again in a couple of years. How much decline? It depends on the area – SF, Peninsula, and Silicon Valley are always in high demand, supply is always tight so the drop should be mild; however, in many other areas in the country, we might see more than 10-20% price drop.
Should I Sell? Is It a Good Time to Sell?
Price is still at its peak. With high sold prices as comparable from Jan and Feb 2020, sellers most likely can cash out at the top price. However, with Shelter in Place, the listing pricing strategy needs to be changed from starting low and having buyers bid up, to starting at a fair price now, as offer counts are shrinking due to lack of viewings.
Should I Buy? Or Should I Wait?
If you are an investor, these couple weeks could be your best week to lowball and try your luck. Not all listings will bend, but who knows! Or you can play safe and wait till the market actually drops in some years. If you are buying a home to live in, I always encourage my home buyers to hunt for the best fit, instead of the best deal. As you need to live in it, it’s more about lifestyle; and a long hold of 5-10 years will guarantee your money back if not higher return. Homeowners bought in 2008 peak still got their money doubled by now.
I’m Looking to Buy/sell, Can I Still Visit Open Houses or Private Showing?
Unfortunately, the answer is NO until April 8, for the traditional kind of showings. However, we have been doing video showings, Facebook live streaming for virtual open houses, 3D scan homes to provide a better experience. We also have done lots of zoom calls for listing and buyer consultation. We might still be able to open the door for you but only on very rare occasions and we will keep social distance to the max – we try to keep everyone safe!
My House Just Got Into Escrow, Is Appraisal Going to Happen?
Many bank appraisers have stopped working for about a week, but now are back to the business with creative ways, e.g. drive through external appraisal. It does not apply to all properties, but for most homes, we are able to get them through!
My House Is in Escrow and About to Close Next Week, Can It Close?
Yes! It is confirmed now in San Mateo County, Santa Clara County, San Francisco County, and many others, assessor recorder service can be done online through e-recording during the three weeks ‘shelter in place’ period. This means your transaction shall not be postponed for more than a day or two due to recording problems.
However, there are other factors that might or might not affect your transaction from being able to close. Here are a few snapshots we caught over the past few days:
Snapshot #1 / Off Market Listing Sold All Cash in 1 Day
We were getting ready to list our Client A’s gorgeous executive home just before ‘shelter in place’ hit us. Last weekend, seeing the COVID-19 situations, clients decided to list their house off-market. We started promoting actively through agent networks, social media, emails, calls, etc. And within ONE day, we accepted an All Cash offer that matches the client’s expected price. We quickly went in contract and are looking to close in time.
Snapshot #2 / Expected Delay Closing Due to ‘shelter in Place’ and Refinancing ‘traffic Jam’
We listed our client B’s beautiful modern condo in downtown SF and got sold off-market in just a few days! However, the transaction was not as smooth and easy. The appraisal was scheduled for Monday. Just before it was going to happen, SF announced ‘shelter in place’ and the appraiser decided to suspend their works. The buyer’s loan approval process isn’t able to continue without an appraisal.
On the other hand, since the mortgage interest rates are reaching record-low and FED cuts interest rates again, refinancing demand spikes and creating a huge line at the lenders. Most likely, this transaction is expecting a postponed closing.
What is the impact on our clients? They’re facing higher due mortgage because of the delay, which was mostly resulted from the pandemic. That is not what we want to see! However, we were thrilled to see the news about banks offering to help customers affected by the pandemic. We quickly forwarded the information to our clients and helped them connect with their lenders. We were told today that the lender is granting an extension and waiving late fees. Yay! We are so happy to see the relief from clients.
Snapshot #3 / Another Expected Delay Closing, as Buyers on This One
The pandemic is affecting everyone’s work, life and finances. We had another group of clients C who are buying their homes. Unfortunately, due to the pandemic and ‘shelter in place’, the loan process was slower than usual. Two days before closing, we got informed by the lender that we aren’t able to close in time.
We called up the listing agent to explain the situation, and the seller understands a necessary delay at this very crazy time. We were able to negotiate a postpone on this case. Everyone’s relieved. We’re so happy to see the support during this time. We just closed it today, hurray!
Snapshot #4 / Offer on a Contingency of Coronavirus Situation
The California Association of Realtors had released a ‘Coronavirus Addendum/Amendment’ on March 17, opening a window for buyers and sellers to negotiate over postponing and canceling contracts due to the worldwide COVID-19 pandemic’s unprecedented impact on the purchase. We were helping a buyer to write an offer, as it was one on one negotiation, we were able to have the addendum in the offer packet to guarantee our buyer’s interest.
What Are We Doing
Yes we are all staying at home at this point, but we are still working actively from home. Let’s see what we’ve been working on over the last few days!
Make Sure Our Transactions Close Smooth as Possible
Our transaction team members are working closely and communicating with multiple parties every single day, to make sure our client’s transactions can close as smoothly as possible. We all understand it won’t be as smooth, easy, and timely as usual, but we are trying our best to assure our client’s benefits!
Promote Our Off-Market Listings
As discussed above, unfortunately, we are not able to have open houses or private showings until April 8. However, the off-market listing is still a great option to market your home for top dollars! Keen buyers are still out there ready to purchase. We can get it done completely virtually and safely. Shoot us a call at (650) 817-5000 if you’re looking to sell your home off-market during this time!
Caring About Our Families, Friends, Clients, and Neighbours
Since everyone is staying at home at this time, it’s a great chance to connect with our family, friends, clients, and neighbors. Even just simply say Hi, how are you doing? Let us know if you need any help? – mostly virtually, of course!
We also believe it is important to show our kindness at special times. We sent our text messages to our clients and friends to ask if they’re doing well. We helped our elderly neighbor to get groceries. We do not over hoard. We are always happy to give a hand to those vulnerable and in need.
Nothing is more important than our health and safety now, so let’s stay home safely for ourselves, our family, and the community. While it is a pandemic time, we actually get to find a different angle to appreciate life, to cherish our health, our family, our home. Let us know what we can do to help. We’re on this together, and meanwhile, we will keep you updated on the Bay Area real estate market!