Working with Buyers in a Covid-19 Environment
By: Noreen Payne
Sitting at my desk and pondering the path forward during this time of social distancing and virtual work during Covid-19, I wonder how things will be different in our personal residential real estate business once we make it through these challenging times. But, for now, the focus is on how we continue to serve our buyers who are not only wanting to buy a home but also have to. Like many of our colleagues, we’re also looking at ways to conduct our business virtually. When it comes to our buyers, for now the days of picking them up in our cars and face-to-face interaction are on hold. Those of you who know me know I’m missing those personal moments immensely!
That said, I’m finding that using tools such as FaceTime, Zoom, App Files, Video and Virtual tours can also go a long way toward building a solid relationship. In fact, we’ve just closed on a new home purchase with a buyer who has never set foot in the home they just bought! Though this is the first time we’re weathering a pandemic, this isn’t the first time we’ve done this. Remote contact can be a common way for buyers to purchase, especially investors who trust us with their goals.
In the case of our recent close, we started in the classic Residential Real Estate fashion, doing what we do best. The fact-finding process, once done in person, can be handled via conference call. During the call I asked a lot of questions and did even more listening. Then I created the usual searches and shared them over email—after which came the usual back and forth feedback, mostly done via virtual tours, photos and a few FaceTime calls.
Working in this manner with our buyer, we actually found the perfect home in no time! I set the showing with the listing agent and luckily the home is vacant and on a SUPRA, therefore, no contact/no touch deemed necessary. Over FaceTime the buyers and I took our time going through every inch of the home, down to the street on which it’s located. We negotiated the deal and went under contract. At the time of inspection, I met the inspector, who we know very well. As a side note: It’s my firm belief that having trusted partners working with you at all times is a must! I unlocked the door for the inspector and reconvened with the client over FaceTime to give them the update. Obviously, many more things can happen prior to closing. In this case, we met General Contractors, interior designers, landscapers, plumbers, electricians, and more. It was a great help having an agent on the listing side who was incredibly accommodating and a pleasure to work with. In these days of Covid-19, our spirit of teamwork is being put to the test. Now more than ever, we’re all pulling together in the best interest of our clients to ensure smooth closings like this one.
In this time of uncertainty, my initial reaction was to withdraw—even marketing didn’t feel right. But, I believe these days the reality is that our clients now need our support more than ever (of course at a safe six-foot distance).
About Noreen Payne
Noreen Payne is a partner in the All About Florida Homes team of Lang Realty. She and her co-partner, Amy Snook, provide concierge-level real estate service in South Florida. She is currently Chairman of the Board for the Delray Beach Chamber of Commerce and is on the Board of Directors for The Achievement Center for Children & Families, and is an active volunteer with The Caring Kitchen.
1. My company’s offices are closed, and I am having a hard time providing my final verification of employment within the 10 days prior to loan closing.
FHA and RHS are allowing verbal verification of employment. Specifically, your employer can provide this by phone. RHS is also allowing email verification. If you cannot get either of these, the lender will require higher reserves to cover risk.
Fannie Mae and Freddie Mac will allow verbal verification when available and an email verification under certain conditions. They have also made other forms of temporary verification available in order to help with verification while social distancing
2.My lender indicated that the IRS has shut down and they cannot process loans without an income verification document that only the IRS can generate. Is this true?
Luckily, there is precedence for an IRS shutdown based on several recent government shutdowns. Some lenders may require this document, but Fannie Mae, Freddie Mac, and FHA do not so this is a lender overlay.
Fannie and Freddie both issued guidance in January 2019 following the previous government shutdown to note that they do not require the 4506T IRS tax transcripts at closing. Rather, they only require a request for the document be signed by the borrower. However, they do require the tax transcript be submitted as part of their post-closing review. NAR has asked both Fannie and Freddie to clarify and publish updated guidance given the unique challenges posed by COVID-19.
Furthermore, the IRS reopened this facility during the shutdown as it was deemed essential. We have reached out to the IRS on this point.
- I have heard that the FHA, Fannie Mae, and Freddie Mac have raised rates and fees on borrowers with lower credit scores or smaller down payments?
These claims are not true. To date, neither the FHA nor Fannie Mae and Freddie Mac have made any changes to credit scoring or down payment requirements. The only change they have made for borrowers is to allow MORE flexibility in how a lender can verify employment.
However, some individual lenders are adding their own, higher standards on these products. The rational is that the cost of servicing these loans has surged due to the widespread forbearance that is taxing servicers’ resources. Under forbearance, the servicer must continue to pay PITI to the investor, but the sheer volume of forbearance to deal with the COVID-19 response is unprecedented. Since lower-credit borrowers are more likely to take forbearance and servicing is harder to get, lenders are less willing to extend this credit regardless of the FHA or GSEs’ standards.
NAR sent a letter to the Treasury, Federal Reserve, and the Federal Housing Finance Agency requesting help for servicers dealing with the unprecedented demands on funds due to broad forbearance requests. Improving servicing is one key to improving the flow of funds to borrowers and homeowners.
Ginnie Mae has announced the creation of a new program, that should help alleviate lender concerns and improve access to mortgage financing. The program will provide cover for lenders by advancing them the money so they can make the required pass- through payments to investors during the forbearance period.
It is hard to say what our future will look like in real estate or for that matter anything in our world, post this pandemic. While there is a lot of “bad” to focus on, I am really trying to focus on any positives that may come out of this time. I am certain for many of us, the time at home with our children, has provided us with opportunities that we most definitely did not prioritize in the past. Realtors are constantly “on” – responding to clients, conducting searches, showing property, coordinating towards closings, educating ourselves, sharing information with our clients and prospects and so on. So, to “have” to slow down has been actually wonderful.
I am spending time doing things with my son that I just hadn’t found the time – we played checkers, twister and even taught him how to cook (even though it is most definitely not my forte).
As for business – when I slow my mind down and really pay attention to the calls we are receiving – I realize that our clients, friends, prospects DO rely on us for real estate guidance. I think this has always been there, but I just didn’t slow down to realize it.
Today a prospect called and asked us to list one of his homes for rent. He had been listed as for sale by owner and hadn’t received calls – the truth is for this one, I analyzed how he was marketing the home and his price point and gave him guidance rather than taking the listing. Why? Because his margins are very tight and I felt that I could help him without his having to pay an agent for this rental – so he reduced to the number I suggested based upon comps and I had him reorder his photos, remove some photos, alter his write up and voila – the phone started ringing.
We are here to help – give guidance, be supportive, educate and be a resource for all. As a thank you for helping him with his rental listing…. And unbeknownst to me…he has another property that he wants us to put up for sale.
For my fellow Realtors, be a trusted resource, offer guidance, continue your education so you can continue to be an expert. Now is the time when you can create some blogs, record videos, etc. and work to share your knowledge.
By: Amy Snook
“ATTOM: The business of buying single-family homes to rent lost some steam after rents stopped increasing as fast as the purchase cost for those rental properties.
“The business of buying single-family homes for rent has lost a little steam this year across the United States as rents aren’t rising quite as fast as prices for investment rental properties in the majority of the country,” says Todd Teta, chief product officer at ATTOM Data Solutions.
“But from the national perspective, things are generally holding steady for landlords in the single-family home rental market,” he adds. “Also, profit trends are moving in favor of investors in higher-rent counties and against those in lower-rent regions.”
As I write this market report, I realize there are two very important aspects of how we are all evaluating the real estate market today. Certainly the numbers from the most recent market report of January 2020 tell a story but also the recent stock market tumble in light of the corona virus concerns is top of everyone’s minds.
Let’s start by talking about January results because they are important to decisions we all will be making today to sell or buy in Florida. First – January was a great month in Florida Real Estate – especially in Palm Beach County. When comparing to January 2019, January 2020 showed an increase in the number of sales, both average and median prices and total dollar volume. However, new listings were down from January last year as well as December 2019 – for a myriad of reasons. What does this mean to our Palm Beach County market? – Well, we now have less inventory and as a result for the market from $300,000 to $599,999 – we have a balanced market – so, therefore, buyer’s make realistic offers and seller’s realize that there is no longer an advantage in a balanced market so before you choose not to respond to an offer – maybe consider a counter! With inventory trending down this balanced market condition may change – stay tuned. The higher end market, however, is a different story – over $600,000 and upwards of the $1,000,000 mark it is still a buyer’s market – a great amount of homes are sitting – over $1 million shows 19 months of inventory – reminder that 6-9 months is considered a balanced market. If you are holding out for a cash buyer, we would suggest reconsidering – cash sales as a percent of all sales is around 37% – but with the interest rates so low, the cost of borrowing money is even more desirable. What do we recommend? That we as agents, dig deep into the pre-approvals – talk to the lenders who pre-approved the buyer – have they run credit, have they reviewed tax returns or w2s? IN other words how far into the process did they go and do they have any concerns? Homes are being sold – the process, as always, needs to be properly managed and homes need to be properly marketed!
As for our recent turn in the financial markets – and how this will impact real estate in Florida – Personally, I believe homes will continue to move in Florida – we may simply have to adjust how we show and how we all work together to get homes sold. There is even more value in videos and remote showings – photography is critical. Also – how we interact at face to face showings – for now we simply don’t shake hands – we just need to be smart about how we do business – in any field right now.
The All About Florida Homes Team of Keller Williams Realty has been busy all around from our Sellers and Buyers!
We could have told you the market had picked up before we even analyzed the market report from Florida Realtors. While the market is behind last year to date – we are finally starting to see traction and the market starting to play catch up.
If you have been reading our market reports monthly, you will have read (tirelessly I know) my rants about sellers’ and agents’ pricing on active versus sold comps. Homes can be listed for any amount but what they sell for, and how long it takes, and how many reductions do make a difference. We are seeing the market price where home sell – hence the movement in the market.
If you have a good marketing strategy, take pictures strategically to show the attributes of the home, land and community, market to the consumer as well as fellow agents – and analyze the showings, feedback and competition – homes will sell!
The market from $300,000 to $600,000 seems to bounce monthly from a balanced market to a slight buyer or seller market depending upon inventory. As we always say:
In a balanced market – where you come out of the gate (price, marketing et al) really, really matters. It is not a race to market – it has to be done right!
Homes in the $600,000 to $999,999 range remain in a balanced market this month so same rules apply as above.
The $1,000,000+ remains a buyers’ market – there is so much inventory and many are still overpriced. If you are a seller, it is worth a real analysis of where homes have sold and how you are being marketed – BUT you also need to be patient. There is a lot of competition, so ensure your home stands out and that you are priced right!
Contact us at (561) 571-2289 – or via email@example.com – if we can provide you with any additional market data that will help inform your decisions! We are here to help – with no obligation.
All stakeholders should be pleased to learn that HUD has a “verification plan for service animals” in the works.
(Note: The following is not legal advice, as we are not lawyers. If you have specific questions about disability accommodations of any kind as it relates to housing, we can introduce you to a lawyer in our network who can advise you.)
According to this report from Florida Realtors, “Landlords and property managers are entitled to “reliable verification” of a tenant’s need for a service animal and can require proof beyond an online certification, a Department of Housing and Urban Development official said Tuesday at the Realtors® Legislative Meetings & Trade Expo in Washington, D.C.”
Florida landlords, tenants, Realtors, and all involved may be interested to hear that HUD also reports to be considering how “exotic” animals (like alligators!) fit into this equation.
We are glad to hear that HUD has this issue on the radar screen, and we look forward to guidance and clarification around service animals in housing. There is significant confusion around this issue on all fronts, and clarification will surely help everyone.
Most importantly, we’d love to see people with disabilities who need service animals be treated fairly and without discrimination. As an extension, we’d like to see the “cottage industry” referenced in this article (that has sprung up to take advantage of the confusion and sell certificates) dealt with.
We’d also like to have investors who own rental properties be more clear on the issues around this, and have more structure and guidance from HUD and its state and county-level counterparts.
Also from the Florida Realtors article:
“It’s important not to trivialize the issue of service animals because of abuses of the law, Grosso said. “Very often, there is some nefarious attribution to people who request assistance animals. But many times, there are people with significant disabilities who legitimately need the assistance of a service animal. They bear the burden of the effects of service animal abuses.”
We received this excellent question recently:
Our house has been on the market for awhile and now we have an offer.
But, it’s contingent upon the sale of the buyer’s home. What does this mean? Should we accept it? It’s the first offer we’ve had in a few months, so I’m thinking yes. Help!
Our advice would certainly depend on a lot of factors, but it’s a maybe!
If your home has been on the market for awhile and it’s not a seller’s market in your home’s price bracket, you don’t want to unilaterally just pass on this – it could be a great opportunity.
We’d want to ask some more questions… Can we work with that buyereir offer to a place that works for both parties? Also, is their home on the market? Is their home under contract? If so, we’d want to look at that contract. We would need to understand how strong their offer is.
There are times that we’ve represented buyers that came forth with an offer like this. It wasn’t our listing, and guess what? We got to the closing table – because we know how to get our buyers to the closing table. In this case, the agent on the other side needs to be helpful, too. So, we also look at who that agent is… because that does make a difference, and we are often familiar with that agent.
There’s a particular clause in the contracts here in Florida called a “kick-out clause.” If it’s a buyer’s market, you as a seller may or may not want to consider that. Basically this clause says,
“I’ll take your offer and it’s contingent upon the sale of the home, but I’m leaving it active. I’m taking backup offers, and when I get an offer you’re going to get first right of refusal. If you still want this house, then okay, the contingency’s gone, this house is yours.”
This can be helpful, as it gives the buyer some protection. If she or he is not in a position to own both homes, this offer can be accepted, subject to the above – a win-win for a buyer and a seller.
The most important thing to know is that every scenario is different, so you want to be sure you are working with the right Realtor… a team that can give you guidance and help you make the right decision for your specific situation. There are a lot of factors to come together to create the right deal! (That’s the part that we love! It’s the the fun part!)
We’d love the opportunity to help you through scenarios such as this, and to get you to the closing table. Contact us at (561) 571-2289 for a no-obligation consultation!
A social media friend sent us a question recently. He wrote:
We’re going to sell our Boynton Beach home soon. I’ve been hearing recently that sometimes home owners who plan to sell pay for a pre-listing home inspection. What is the benefit? If we sell our home, do I need one?
I will answer this question the way we answer a lot of our questions lately – with “It depends.” Here’s why:
In a perfect world, we’d always like to see a pre-listing inspection so we know what issues may exist. It can be incredibly helpful.
If you, the seller, are the first to know of any items that may show up in inspection, you can work with us to develop a strategy around how to handle those issues. We can decide what we want to fix in advance. We can learn the costs needed to repair some of the bigger, more complicated items. Being informed helps us to better negotiate.
Ideally, the issues do not end up impacting the listing price or the selling price. But it’s good to be prepared and pre-think whether we are open to offering a credit, and/or if we plan to make repairs.
In a scenario in which you have an older home that maybe needs a lot of work – or when we know we’re going to have inspection issues – it’s actually imperative so we know what we are actually dealing with.
But, it’s not realistic to have a pre-listing inspection in every scenario. We look at our clients’ needs on an individual case-by-case basis. To help you make a decision about this, we look at factors like the home’s age and condition (as mentioned), the price point, the hyper-local market conditions, and your personal timeline and goals.
We often begin to discuss this in a pre-listing consultation appointment. We’d love the opportunity to work with you and help guide you through the process of listing and selling your home. Please call us anytime – Amy and Noreen, All About Florida Homes, Keller Williams Realty – at (561) 571-2289.
And, if you’d like us to provide you with a free, on-obligation home value estimate, head here to request it:
AMY STARK SNOOK,
Phone | 561-571-2289
All About Florida Homes