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Tips for Buying A Property During Coronavirus
As we all are facing challenges in our day to day life due to Coronavirus, the real estate market is also confronting with its own difficulties.
However, there are some realtors and companies which are trying their level best to adjust to the new normal.
Spring is typically prime time for home sales. However, this is not your typical spring as we all know it.
Though all the challenges are real, things like virtual property tours to digitally signed contracts are helping in taking shape to a new real estate market.
n this post, we will learn 9 tips for buying a property during coronavirus pandemic.
1 - Income
Firstly, you need to know if your income is stable. If you have any concerns about the stability of your job or your income, then buying a property at this time may not be a great decision. Make sure you talk to your employer before you proceed.
It doesn’t hurt to wait a few months until you have certainty before buying a property during the coronavirus pandemic.
2 - Real Estate Market
Many potential buyers are wondering if the property market is still open. Yes, it is! You can view properties virtually online Or have a virtual tour with your realtor.
If you like the property, you can do a one on one inspection with your realtor.
There has been a drop in the number of houses being on the market. However, the market is still open.
3 - Property Prices
The big question everyone is asking is, will the property prices fall? The honest answer is that nobody knows.
Most economists are predicting a drop between 5% to 15%. However, one thing for certain is that there will be fewer properties for sales and so there would be less activity in the market.
Just because the prices are falling, it doesn’t mean that you can’t indulge yourself in buying a property during coronavirus pandemic.
If you are expecting prices to drop like say 10%, then just offer 10% less. That way, if the prices do fall, you have already locked in that price.
4 - Off Market Opportunities
These are properties that are not listed for sale on any of the real estate websites. Typically, this is someone who wants to sell their property, and they have contacted an agent, but they haven’t gone through the formal marketing process.
The best way to access off-market properties is through a buyer’s agent. However, you can also contact real estate agents in the area you are looking for buying a property.
5 - Cooling Off Period
When buying a property during coronavirus pandemic, you must have a cooling-off period or a COVID-19 Clause in your contract that can be set up by your realtor. The reason for this is that a pre-approval isn’t a guarantee.
The lender can and will renegotiate on the pre-approval if they see there are any issues around the stability of your income. So you must manage that risk by having a cooling-off period.
6 - Loan Application
You should submit a very strong loan application. It means that the lenders are very skeptical at the moment.
They would be looking at the risks of your situation, and what you can do is mitigate those risks with additional evidence and by answering their questions.
We suggest you provide other income documents proving a solid history and stability of your job and income.
For example, provide as many as 6-12 months of pay stubs and a letter from the employer stating no reduction in income due to the COVID-19. Lenders are conservative; however, they are still approving loans.
7 - Being Ethical
You should be ethical when buying a property during coronavirus pandemic. If you are paying slightly below what you would have paid to say earlier in the year, that is a fair market price and should not be any problem.
However, if you are making offers that are too low for the desperate seller, then you are preying on their vulnerability, which doesn’t look ethical.
8 - Property Rebound
During past property downturns, there has often been a rebound where the property prices increase rapidly in a short time.
Nobody knows if there will be a rebound. However, if you do think that the property prices are falling and you want to wait before you buy, then you should be pre-approved and ready to buy.
Because, when a rebound does happen, it can often occur a lot faster than what people think. So when it happens, you will need to act quickly.
9 - Fixed-Rate Mortgage
Consider a fixed-rate mortgage when buying a property during coronavirus pandemic. With the FED cutting their rates, it is making the lenders offer the fixed-rate mortgages at record-breaking lows.
This is making more and more borrowers to choose fixed-rate mortgages over ARMs.
Conclusion
There could still be many other challenges that you might have to deal with when you are buying a property during coronavirus pandemic.
However, if you follow these tips and have the right team of realtors and loan officers to guide you in the right direction, you could find success in buying a property even in this challenging time.
If I were to buy real estate for investment, I would make sure to hire the best wealth management planning service that may help me with my money decisions. Well, I also agree with you that a pre-inspection is needed. Thank you for sharing here as well the importance of saving at least 10% for the downpayment.