Buying a home in the midst of a pandemic can be daunting. The unsettling and the unknown can be frightening. Yet, we took a leap of faith and bought a fixer-upper right in the middle of the shelter-in-place orders were implemented. We got the house with no competition. But, the process was not as smooth as pre-covid19. Here’s why.
With Covid19 the entire buying/lending process has changed in not such great ways.
But first, I want to caveat that we are not first-time homebuyers. If you are a first-time home buyer read this first. This is probably our 12th or 13th homebuying transaction. Regardless, you can still get your dream home if you do your own research, work with a phenomenal loan broker, and a well seasoned/experienced realtor. We always say luck happens when preparation meets opportunity.
Hubby and I have always been on the prowl looking for the next real estate deals. That means, getting our financial health in order and troll the areas we are interested in investing in. Every single day.
Right now, we are already eyeing another location – LOL
Our initial plan was to expand our home (we outgrew our space) and invest in another rental property. After interviewing countless contractors (almost signed with one of them) we didn’t think it would make financial sense or add unnecessary stress just to increase our home with an additional 400 sq. ft. So, we decided to just look, and if we find a place that is worth the investment we should pursue.
As mentioned earlier we have bought many homes in the past but have never had to experience so many bidding wars until now. To make a long story short we submitted offers to more than 20 homes in a span of three months competing with bidding offers from 31 to 20, 15, 12, 8, 5, and 4 for each property right before the quarantine. Not once did we go over the asking price – that turned out to be a good thing.
We were able to snatch this fixer-upper coastal property well below asking price because it fell out of escrow due to covid19. At the same time, the seller needed to sell this place due to the uncertainty of the economy and everything else. We later learned that a home flipper decided to pull out of this house due to the pandemic.
So what’s changed with the real estate landscaping during these unprecedented times?
HOME VIEWING
When the shelter-in-place orders were implemented the entire real estate economy was at a standstill including every single business within the state if not the world. Everything came to a screeching halt. Most listings were delisted and open houses were not available in person. But that didn’t deter us from looking. We kept our eyes out virtually. And because real estate is deemed as an essential business, they were open but with some guardrails put in place.
In-person open houses became Facebook LIVE Open Houses. Or, only your real estate agent can tour the house, and either he/she sends you the videos or do a live session with you while touring the home. And if you want to step foot on the property, you have to make an offer and sign the COVID19 Entry Advisory and Declaration. This form is used for any visitor who is entering a property with a tenant or occupant. By signing this form you agree to abide by the rules to wear a protective face mask, wash your hands with soap and water or use hand sanitizer, and wear gloves. And if you are currently afflicted with, or within the last 15 days, have been in contact with someone afflicted with COVID-19, or have any symptoms such as fever, cough or difficulty breathing, you can not enter the property.
MAKING AN OFFER
This is probably the best time for buyers to buy a house in my opinion. Sellers who are selling their homes really need to sell due to major life events or changes. If you have been on the sidelines trying to buy a house you are now faced with fewer bidding wars. A strong offer usually gets accepted. If you think from a seller’s perspective, this seller just wants as much money as possible with as little headaches and the shortest amount of escrow closing time.
You can forget about a personal letter cuz money talks…at the end of the day, the seller wants the money in his/her pocket. We wrote so many personal letters to the sellers and even threw in a cute malti-poo – NADDA! They just wanted more money so they accepted the highest bidder. There are some strategies to get them to accept the deal and then negotiate the price based on the home inspection report, etc. So a very strong offer can you in the door. But remember, due to unforeseen circumstances or hold-ups due to COVID-19 make sure to ask your realtor to submit the “coronavirus amendment” to postpone the close of escrow by up to 30 days or more without penalty as part of the offer.
GETTING A MORTGAGE
Not many of us have a million-dollar or two stashes underneath our mattress to put an all-cash offer on a house. So, if you are mere mortals like us then you will most likely need to get a loan from a lender to buy a house.
The interest rate is currently all-time low so money is cheap, which makes it the perfect time to borrow money to buy your dream home. Make sure to work with your lender to get the best rate possible based on your situation. I highly recommend Raffie Kalajian and Brett Smith at CMG Financial. They made this entire process seamless and stress-free for us.
Something to keep in mind though. Most lenders will require more cash reserves than usual. There are a few things a lender does after you have signed your loan docs. Due to COVID19, they verify your employment not just to see if you are still employed but will also inquire about the probability of you being furloughed. On top of that, they also call your current lender to see if you have made any loan forbearance request on your current loan. If you did you can kiss this loan goodbye. They still run a soft credit report after signing the loan docs like they normally do. So those 3-day window is crucial because you can potentially lose your 3% deposit. Just hold off on getting that Tesla or that beautiful sofa you’ve been eyeing before you bought your house until you get the key!
Whether right now is the best time to buy a home really depends on your situation. No one can time the market but one thing is certain, there is less competition now. This is a rare opportunity to make offers on properties without as much competition as it was before.
Now that we bought a fixer-upper our next challenge is renovation during the pandemic, which I will share on an upcoming post.
