If you’re considering selling your home during the Covid-19 pandemic, you may have more of an advantage than you realize.
High buyer demand and low inventory mixed with historically low interest rates are creating a buying frenzy like we haven’t seen before. Sellers who are listing their homes now are seeing dramatically less competition on the market, and many homes are selling quickly, and with multiple offers.
Under more normal circumstances, we see a strong “Spring Market” in real estate, which is when we experience our highest sales numbers of the year. However, our spring in 2020 was almost completely halted due to the stay-at-home orders and quarantines enacted by most states. It became incredibly difficult to show and sell homes, and many sellers pulled their homes from the market for fear of exposure to the virus. Not only that, but many Americans saw a reduction in income or lost their jobs all together, shrinking the buyer pool even further.
However, once the stay-at-home orders were lifted and many businesses began to reopen, buyers whose home search had been halted reentered the market. Many buyers who had been temporarily laid off went back to work, or were able to continue working from home. Realtors began to introduce safe options for home shopping, allowing buyers to conduct much of the home buying process virtually – from showings to paperwork to closing. Interest rates continued to drop, making it more affordable than ever to buy. There was a lot of pent-up demand, and suddenly, we had more buyers looking for homes than we had homes to sell!
Incredibly Low Inventory
Listings on the market are at an all-time low. Even before the pandemic began, we were seeing a shortage of salable inventory in real estate. With many sellers holding off on listing their home because of health concerns or uncertainty about moving, it continues to drop even further. At the end of July 2020, we were down to about half the inventory of this time last year here in Wicomico County (*see Active Listings chart). Less inventory = less competition on the market for sellers. With so many buyers out there looking, listings are bound to get more attention than they would pre-pandemic; buyers simply don’t have many choices. A well-priced listing is almost guaranteed to have dozens of showings within it’s first week on the market.
With so many buyers and so few listings to satisfy them, it’s natural that some buyers will fight over the same home. Listings that are reasonably priced and whose condition is acceptable for financing are typically seeing multiple offers come in, and usually within days of listing. It’s not unusual to see 5, or even 7+ offers on a “hot new listing”. Sellers are able to have their pick of buyer offers, taking into consideration terms like price, financing, and inspections.
Sales are up!
Even with inventory so low, sales continue to soar. In April, sales hit bottom due to the pandemic, but by May we saw the numbers begin to recover. By June, we had exceeded 2019’s year-to-date sales, and continued to do so through July (*see Closed Sales chart). In Wicomico County, closed sales are up 5% over this time last year. We’ve even seen home values begin to creep up, which we haven’t seen in our area in some time. The average sales price in Wicomico County in July 2020 was $223,719, as compared to $202,932 in July 2019, a 10.24% increase.
Technology for Buyers & Sellers
Many sellers still have concerns about Covid-19, and Realtors can meet you where you are comfortable. Don’t want Open Houses or lots of showings? No problem. There is technology out there to allow for incredibly detailed virtual tours and showings, and often buyers need not enter a home in person until the final stages of negotiation or purchase. That means that a buyer doesn’t have to physically visit a home until they are extremely serious and ready to write an offer – and in some cases buyers have not done so until the day of settlement. Virtual meeting technology makes it possible for clients to meet with their Realtor via technology to review and sign documents like listing agreements, offers, and inspection reports, minimizing the amount of in-person contact. Closing can even be conducted with social distancing in place, with title companies coming out to clients’ cars to sign paperwork!
Safety Measures in Place
If a seller does decide to allow in-person showings, there are new safety requirements in place to protect everyone.
- Buyers and their Realtors are required to wear face masks, and group sizes are limited in many places to no more than 3 guests.
- Many Realtors are equipping themselves with hand sanitizer, disinfecting wipes, and even foot coverings, and it’s a good idea to have those items easily accessible at a listing.
- Sellers can ask all guests to sign Covid-related disclosures to add an additional layer of protection. They can also turn on all lights and open any cabinets, closets, and interior doors before showings when possible – minimizing the need for guests to touch anything. And of course be sure to do a clean-up to disinfect areas that might have been touched afterward.
Options for Uncertain Sellers
Many sellers would love to sell their home right now and take advantage of this market, but they aren’t sure where they will go next. Perhaps they aren’t sure if they will be able to find a home they want to buy, or they aren’t sure where they will fall financially in a post-pandemic world. While no one can predict the future, this strong sellers market probably won’t last forever. Even if inventory remains low and buyer demand high, interest rates are already beginning to rise, decreasing the affordability just slightly. With the uncertainty caused by Covid-19, we don’t know where we will be next year with regards to unemployment and buyer ability.
Renting can be a viable option for many sellers. Renting for several months to a year can give a seller the flexibility to secure their next home and comfortably make arrangements to move. Although it can be stressful to consider moving twice in a short period of time, the amount that seller can recoup from their sale may make it worth it. And chances are, interest rates will still be relatively low when the time does come to buy.
For sellers who do decide to list their homes now and take advantage of this unprecedented real estate market, there are a few things to keep in mind. As is always true in real estate: be prepared for delays. In a perfect world, closings always happen on the designated settlement date, but right now there are a multitude of factors that could cause delays, from buyer employment and financing to mandatory government and finance office shutdowns. Lending is more stringent right now than its been in the recent past, and loan programs are changing all the time. What was an acceptable credit score just three months ago may no longer fly. And although many buyers are currently earning unemployment and making more than they would if working, this will not qualify for long-term employment when it comes to financing.
Selling a home can be stressful anytime, but keep in mind that tensions are especially high right now. There is a lot of uncertainty in the world, and both buyers and sellers are emotionally charged. Try to remain calm throughout the process, and take your time to talk through issues with your Realtor. Staying prepared and keeping a positive attitude goes a long way when selling your home. Look at the big picture. What are your long-term goals, and how can selling this home help you get there? Be sure you are setting realistic expectations and adequately preparing yourself for the sale. Your Realtor can be a valuable resource for information such as the expected time on the market, navigating the inspection and negotiation processes, and working out financing details.
We can’t predict the future, but we can use our knowledge and local expertise to help make your trip to the closing table as smooth as possible.
Joni M. Williamson
ERA Martin Associates