Analysts believe the pandemic will have a large but temporary impact on the housing market in Canada. For buyers looking for bargains — or less competition in a previously tight housing market — now might be the best time to shop for real estate. Here are three tips for buying and selling the age of COVID-19.
Impact of the coronavirus on the housing market
“The coronavirus is leading to fewer home buyers searching in the marketplace, as well as some listings being delayed,” says Robert Vanovermiere, a Calgary-based realtor. Going into June, RBC forecasts a 20% drop in sales activity, as the market responds to temporary work lay-offs and stock market dips. In a recent interview, Robert Hogue, senior economist at Royal Bank, has said the pandemic will be a “tough but temporary blow” to Canada’s housing market.
“We lost about 30 per cent of our sales volume when you compare March 2020 activity with March 2019,” says Vanovermiere. “But we haven’t seen a dip in pricing— yet. A lot of sellers just took their homes off the market or chose not to list. We think these sellers realize that this situation is temporary and they’re not willing to sell at a discount.” Real estate agents are anecdotally reporting that buyers are still very interested in purchasing first-homes, move-on-up homes as well as downsizing homes.
Real Estate Know-How
#1: Learn how to shop listings on-line
Buyers need to learn how to read a listing and examine online video or photos to determine whether a property is worth scheduling a more in-depth tour.
For instance, does the listing have more images of the home’s exterior vs interior? It could be a hint the interior needs work. If you’re not looking for a fixer-upper, or don’t want to handle a renovation project, skip this property.
Examine pictures to see if curtains or blinds are left open or kept closed. Closed window coverings usually mean the seller is trying to hide a bad view — such as a gas station, a nearby neighbour’s house, or a dilapidated shed.
Consider camera angles. If a photo looks stretched, then the seller is trying to make rooms look larger than they are Or, if a photo is a close-up of only one object, say the bathroom sink, then the room is probably very small.
Also, consider the language. ‘Fixer-upper’ or ‘original owners’ typically means the property needs updating, while ‘cozy’ or ‘charming’ can signal a smaller-sized property.
After analyzing the descriptions and visual representations, and you still decide you like the property, then it’s time to ask your agent for more information. As for the seller’s disclosure statement, not all sellers will complete one, but if it’s available, you’ll want to it. It should outline any known problems with the home’s structure, as well as the age of various features and what kind of improvements have been made and when.
#2: Choose forward-thinking professionals
If you find a property that interest you, then find your team of real estate professionals. Pre-COVID-19, this selection was often a result of referrals and interviews. After the outbreak, this shouldn’t change, but a few of your requirements should.
For instance, has the agent, mortgage broker, home inspector or real estate firm moved their operations online or to full remote operations?
“Not every home is set-up to seamlessly keep doing business even during the pandemic,” says Mark Weisleder, a 30-year veteran of real estate law and a senior partner with Real Estate Lawyers.ca LLP. “If a buyer doesn’t want a disruption in service, then she’ll have to make sure the law firm [or agent or any other real estate professional] isn’t going to close down unexpectedly due to evolving pandemic outbreak requirements. Professionals need to prove they can work remotely in a way that ensures the security of the buyer’s personal information and protects their privacy.”
Ask professionals how personal information is captured and stored. Also, establish how document management such as signatures, witnesses and money transfers are handled.
When working with a buyer’s agent, ask how they do walk-throughs. Do they use Zoom or other video conferencing software? Are they willing to live-stream their walk-through? This is key since a live, on-line walkthrough will let you ask your agent questions that could make or break the deal.
#3: Keep your terms tight
Finally, if you’re considering a property purchase during COVID-19, get your details in order and be ready to move quickly.
For instance, talk to a mortgage broker about pre-qualification since many realtors now require potential buyers to be financially verified.
Be willing to sign a deal quickly, and keep in mind that terms may need to lengthen, even if timelines decrease. For example, you may want to add in a clause that you require two weeks, rather than the standard one week, to finalize financing. This allows you time to secure financing at the best rates, even as wait times for agents and bank personnel are significantly increased.
However, don’t be surprised if real estate agents on both sides of the transaction push for a shorter closing date. A lot can change in a day, never mind 30 or 60 days. To minimize potential hiccups when closing a property deal, many realtors strongly suggest a closing date under 60 days from the date of agreement acceptance.
“You don’t want to have long closing dates,” says Weisleder. A shorter closing date shows that a buyer is serious. This, combined with a fairly sizeable deposit upfront, will help sellers see how committed you are and will give buyers a better chance.
Given that pent-up demand and a lack of supply dominated the biggest real estate markets in Canada prior to the pandemic outbreak, this softening of the real estate market will likely be followed by a strong rebound — and, in the near future, this could eventually push home prices even higher. Buyers in a strong economic position currently have a window of opportunity that won’t stay open forever, and this could mean that the time to strike is now, if buyers want bargains.