This blog post should in no way imply that residential real estate is “business as usual.” We are staying home with you. We are taking this crisis seriously. At the same time, we are trying to conduct activities – often remotely – to complete deals currently in the pipeline and ensure all parties receive the services expected in a home purchase and sale.
So much has happened in the two weeks since my last blog post. You, me and millions of others across the region are under the state’s stay-home order as the coronavirus threatens our neighborhoods.
Gov. Jay Inslee issued a two-week ban, effective March 26, on non-essential business activities in Washington, including most construction projects and in-person real estate activities. The order set limits in the preparation of a new home listing (even though, yes, there are plenty of owners seeking to put their homes on the market).
The governor has since eased some rules, acknowledging that without specific real estate activities Pending home sales (mutual acceptance between buyers and sellers) could be in limbo and potentially leave some people homeless. For example, Gov. Inslee issued an emergency proclamation to allow remote notarizations. The action permits real estate and other transactional business to proceed using electronic means – at least until April 23 under the 30-day emergency order.
Escrow is considered an essential – financial-related – service, allowing closing agents to conduct signings on property sales and the disbursement of funds. Other essential services include mortgage origination, processing and underwriting, as well as county recordings and the work of their support staff.
The emergency proclamation was followed on March 27 by the governor’s decision to allow property tours, home inspections, appraisals and final walk-throughs “by appointment and limited to no more than two people on site at any one time, exercising social distancing at all times” – a significant move that will smooth out the last steps of a home transaction.
Brokers can now show a home with buyers, one person at a time, with other interested parties waiting outside. Residents must vacate the property before any preview or showing appointment. Brokers can also escort a home inspector onto the property but clients will not be permitted to join inside; according to one home inspector CEO, buyers will have to wait outside to hear a summary of the completed inspection and pay for the service in person (Venmo, checks or cash).
Surprisingly, appraisals were not originally designated “essential” business. Most appraisers adjusted their activities to follow social-distancing rules by conducting so-called drive-by (visual) appraisals without visiting inside the home. Other appraisers stopped accepting new business altogether, further pressuring a sector understaffed and overworked. Now, though, full appraisals can take place.
This latest update from Olympia also addresses some gray areas in the buying and selling process. They include allowing the exchange of keys and garage-door remotes, as long as no more than two people are present and never come within six feet of each other. To maintain social distancing, sellers (or their listing agent) can also leave items in a contractors lockbox on the property.
Moving services were added March 30 to the list of essential businesses. The state organization that represents movers said they were given permission to operate when needed to ensure people remain in housing, contracts are fulfilled or vulnerable individuals are removed from danger. All moving work must be conducted with the fewest employees possible and follow social distancing and sanitation measures.
Photo and staging services were added to the list of essential businesses on April 1 and are allowed by appointment only. Permitting professional photography – including the virtual walk-through of a home – will allow buyers to uphold the stay-home order while browsing potential new digs and presumably narrow their physical visits. Sellers should vacate the property before any photography or home-staging activities.
In this unsettled economic climate, there are greater risks with a buyer’s mortgage application (unless, of course, the sale is all cash). Applicants are seeing interest rates gyrate by more than a percentage point and personal investments are generally losing value as equities markets experience declines – indications that a buyer’s purchasing power may be weakened by the time a down payment is due.
Foreseeing possible issues with meeting deadlines, the Northwest Multiple Listing Service (MLS) introduced a new form in March that builds in more time for buyers and sellers to complete a deal. If included in a purchase and sale agreement, this “force majeure” addendum – applicable during a pandemic or acts of God – allows an extension for any number of days of contingency and closing deadlines. In these trying times, all real estate professionals should discuss with their clients the addition of this addendum.
It’s also worth noting that most construction projects are under the original stay-home order and not considered “essential.” Gov. Inslee said the ban applies to commercial and residential work, except publicly financed low-income housing construction and projects that “further a public purpose related to governmental function or facility.” Those exceptions include (as of this writing) ongoing work for SoundTransit, as well as at Seattle Center Arena and the Washington State Convention Center.
Also, existing homeowners holding a mortgage who may struggle making payments should consult with their lender to consider a pause. Holders of U.S. government backed loans will likely qualify for delayed payments. The telephone number and mailing address of your mortgage servicer should be listed on your monthly mortgage statement. Contact them!
In this new-world order, it’s prudent for both buyers and sellers to consider consulting a real estate attorney to ensure they are protected from contractual and liability issues. Buyer, seller and mortgage holder: Beware, in these unusual times.
At a time of uncertainty, our industry – with the help of state and federal institutions – are showing their flexibility and creativity to keep real estate activity moving along as we strive to cautiously and safely rebound into a different “normal.”
I would be remiss if I didn’t acknowledge all the people of Washington who have been directly affected by the virus. That includes the friends and family of someone they know who have sadly lost a life or are suffering from this terrible illness. My heart also goes out to all involved in the health-care and emergency-services communities who are risking their lives as they help others in dire need. We are grateful to them and are praying for their good health.
Be safe, all.