How Will Coronavirus Change Real Estate Transaction Habits?
One of the many effects that COVID-19 (coronavirus) is having on the real estate market is how homebuyers and agents are navigating these now murky waters. States like California have deemed real estate an essential business, meaning if you’re an agent in that state, you’re able to continue working as long as you follow social distancing guidelines.
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While demand for homes has dramatically decreased due to the pandemic and national and state guidelines on social distancing, people still need to find homes and are embracing technology “earlier than any of us could have anticipated," said Redfin CEO Glenn Kelman.
This sudden surge in VR has us pondering “How will home buyer and seller behaviors change permanently because of coronavirus?” To answer the question, we asked our expert real estate team/crew of magical fortune tellers to tell us what they think will happen in the near future.
Coronavirus and Housing Market Behaviors
iBuying Will Continue to Grow, but Not Without More Agents
iBuying apps have exploded on the scene over the past year, scaring the bajeezus out of real estate agents all over the country. The biggest question being asked is “Will this take my job?” and the answer, for most agents, is “Probably not.”
The audience iBuying apps are targeting is very specific and directly deals with the competitive advantage iBuying presents: convenience. People who are using iBuying apps are looking for a quick and simple solution to homebuying due to their unique circumstances.
Sometimes, families need to abruptly move to a new city for a job but don’t have the liquidity to do so. Other times, it could be a disability that requires a 360-degree service that does everything they cannot. On the other hand, iBuyers are taking on a huge, inherent risk by buying homes on the spot. They have to be picky when choosing homes. Otherwise, they’re taking on too much long-term exposure. This relationship is a two-way street and requires both parties' particular needs to be met.
With the onset of the Coronavirus epidemic, there should still be valid expectations that people will resort to iBuying for future home purchases. People will value this convenience while lessening human interaction. Regardless, this increase will also require these apps, like Redfin, to employ more agents for properly executing these transactions. It is in their best interest to do so, simply to properly service their clients. Believe it or not, there are many things a machine can’t do that an agent can.
iBuying will probably grow, possibly now quicker than before, but it will require agents like yourself to help with their expansion. And even then, iBuyers will always be limited by inherent risks when purchasing homes.
Open Houses Will Slowly Become Taboo
About a year ago - has it really been that long - we discussed the benefits of holding an open house. While there are many advantages to open houses, this recent pandemic could deter people from stepping into a listed home filled with potential buyers.
Unfortunately, open houses already have a low 3 percent success rate. With this growing taboo of avoiding groups potentially having lasting effects, it might not hurt to spend more time creating 3-D Virtual Reality tours for easy distribution and focusing on one-on-one in-person tours.
People Will Trust Online Sources More Often
With so many false listings on websites like Zillow, it’s pretty common for homebuyers to not trust online resources. However, recent events may change how people of all demographics view and depend on the internet. In order for this to become a permanent change in behavior, real estate websites will need to reassess their quality-control procedures, including who is allowed to post listings on their website using a validity score of some kind. This will be very similar to how social media sites have begun cracking down on “Fake News” through user and professional audit feedback.
All Purchase Contracts Will Contain Clauses Protecting Against Natural Disasters
As many of you know, many contracts throughout the business world sometimes feature a “Force Majeure.” This clause refers to an event which is outside the reasonable control of a party and which prevents that party from performing its obligations under a contract.
People are going to want to protect themselves going forward. By creating these Force Majeure clauses, events like the coronavirus will allow them to secure their best interest without losing money.
Transplants Will Embrace Virtual Reality Tours
This pandemic has deterred many quarantined families from making their big move across the country, leaving tons of unsold homes on the market. There are currently many families with free time to plan their new move, which includes looking at available homes online. Those homes with virtual reality tours will have an advantage for that very reason alone.
It’s very difficult to put an offer down on a home without actually viewing the place. There are so many nuanced questions and observations one must ask to fully understand what exactly they are purchasing. However, the current situation may force people to make these decisions a thousand miles away. If agents can create a high-quality VR experience that answers all their questions and potential concerns, buyer habits over time may adjust and become more trustworthy of VR.
Title Companies & Lenders Will Start to Offer More Digital Home Closings
Although the majority of the home underwriting processes can be done online, most lenders and title companies ask for a public notarization to be done in person on closing day. Now, up to 15 states and counting are allowing companies like Notarize to do this whole process without leaving your home.
This new addition to the system will quickly expedite the process of closings and home loans while diminishing costs of paper, loan, and human error. With many families looking to refinance their home - a current issue that’s placing tremendous stress on the home mortgage loan system - or quickly move once the pandemic ends, expect a large increase in this new mode of digital home closures.
When it comes to human behaviors and their ability to embrace technology in real estate, it’s not unsurprising to see a change in the way people buy and sell homes. This isn’t all because of the pandemic but rather behaviors we were already adapting to beforehand. The coronavirus was merely a catalyst that sped everything up.