In our most recent blog, we discussed some of the challenges and opportunities involved in selling your house in the COVID-19 era. (Should I Sell My House Now, to Get Ahead of the Market?) Today, we will address the situation from the other side of the negotiating table: What should homebuyers expect from the process and what steps should they take before making a purchase?
• Obviously, social distancing has affected our everyday lives in ways that would have seemed unimaginable till a few months ago. The good news is that you can still go see homes in person, albeit with a few extra steps in place to ensure that it is a clean, safe environment. We have seen Realtors throughout Greater Phoenix being proactive on that front. At R.O.I. Properties, our real estate agents are taking extraordinary precautions to ensure the health and safety of buyers and sellers. They arrive early to make sure that everything has been opened up, verify that the property has been vacated, and use antibacterial wipes on surfaces such as door handles and light switches.
• We have also seen an uptick in people purchasing homes without ever stepping foot on the property, which used to be mostly confined to out-of-state buyers. Virtual tours are no longer a nice-to-have—they are a must-have! If possible, you still should observe a home from the outside, or to have a trusted person do so on your behalf.
• One benefit for buyers right now is that we are experiencing an increase in supply, with far more options available than this time last year. The majority of properties coming back to the market are under $500,000. This is due to two factors: 1) the listing of former Airbnb, short-term rental, or investment properties, and 2) an increase in entry-level properties that might be job-sensitive or have other risk factors built in. While we are still technically in a seller’s market, higher inventory levels and an increase in motivated sellers may give you a bit more negotiating leverage as you make a deal to buy a new home.
Finally, you may be wondering about financing. Lenders are getting a bit more stringent again about borrower qualifications—and while rates are low, they have been volatile. “We’ve had days with multiple price changes in the same day, which is highly unusual,” says Kristi Zimmerman (https://www.facebook.com/LoansByKristiZ/), a licensed mortgage professional (NMLS #841411) with Suburban Mortgage (NMLS #3089, BK #10123, Equal Housing Lender). “If someone is purchasing a home or wants to refinance and they get a good rate, we recommend that they lock it right away.” Zimmerman also notes that low-FICO programs (credit scores below 620) are going away, and for government loans, lenders are requiring scores of 680 or higher. On the other end of the spectrum, jumbo programs have become very limited or gone away—requiring buyers and lenders to get creative on financing more expensive homes.
In an upcoming blog, we will offer more tips on navigating the current mortgage market with Kristi Zimmerman—so stay tuned!