How quickly things can change. The novel coronavirus, or Covid-19, is growing at a quick speed in the US, and in Santa Clara County particularly. With the necessary Shelter in Place order across California, real estate has pretty much ground to a halt (see my related article on the coronavirus impact on real estate sales here).
Coronavirus: is work or a task essential or non-essential?
The crux of the matter comes down to what the government deems essential versus non-essential work or activity.
YES: Grocery stores, pharmacies, police, fire fighters, medical work, bankers, contractors doing home repairs (electrical, roof, plumbing) or residential construction, and title companies fall under essential. Walking one’s dog, getting exercise by walking, jogging, or biking are essential – but individuals must keep that 6′ social distance while doing so. Restaurants are essential but can only operate takeout food (link to article on my Live in Los Gatos blog about eateries offering meals and even groceries at this time). Home sales can get completed, thanks to the county recorder’s office accepting e-recordings. Notaries are allowed to meet with signers (but no real estate licensees or lenders present).
NO: Real estate in-person work is non-essential under this coronavirus order. Real estate agents must stay home, like everyone else. No showings, no appointments in person, no open houses, no meeting appraisers or inspectors. Movers are a no-go, too.
NO for now – may change? Home inspectors seem to be non-essential, but it’s possible that it could be changed a little as the home confinement for everyone continues. It would not surprise me if both inspectors and appraisers could work, but only alone, without buyers, sellers, or agents present sometime in the coming weeks. We Realtors are watching this carefully to see what happens. There’s a push for permitting virtual notarization that I suspect will go through (and become permitted at some point soon).
Appraisers are working for some lenders. Others are not. Today I got an update from my wonderful Wells Fargo lender: “For purchase and no cash out refinance, Wells Fargo will use Drive-By Appraisal report. We will prioritize the purchase appraisal order. ”
Is it possible to buy a home during the Shelter in Place order?
Technically, it is possible to get into contract right now. Closing during this coronavirus Shelter in Place period is another matter. What can happen is:
- you may write an offer with your agent and sign it using DocuSign, Authentisign, or another electronic service
- you can wire your initial deposit to the title company
- you are able to review all of the disclosures, reports, and pre-sale inspections etc. and sign them electronically
- you must meet with a mobile notary or escrow officer to sign the final documents
- the title company can record the deed electronically
All of that is good, but what cannot happen right now, under the current order, is still a big hurdle:
- Appraisers cannot visit the home (perhaps that will change?)
- Inspectors cannot go to the property (may change?)
- your agent cannot do his or her Agent Visual Inspection Disclosure (mandated, no work arounds exist)
- you cannot visit the house or condo
I would not suggest that you buy a house sight unseen, which we call a blind offer. It’s dangerous and unwise. There’s enough danger with coronavirus alone without compounding it!
My belief is that this Shelter in Place will go on for 2 or 3 months as that is what the governor of California said last night. In that case, it would be practical to allow certain real estate functions to move forward in a limited way so that people can buy and sell. It would make sense to permit private showings with clients staying 6′ away from their agents, for inspectors to visit the property with no one else present, and same with appraisers.
There is a lot we do not know. With sales pretty much stopped, we don’t know where values are. Are they falling? Are they rising? There’s no data. With the stock market falling and unemployment rising, it seems like prices should fall in real estate, but we never really know until there’s a look into the past.
We don’t know how long the situation will last. Given that there’s no vaccine, and it will be 12-18 months before we get one, it’s probable that the Shelter in Place will not stretch that whole period. But it seems probable that there will be cycles of sheltering and more liberty based on the number of cases in any given area. I believe that we will have spurts of freedom and being able to sell and close escrows between periods of home isolation.
This is an unfolding situation that seems to be changing almost daily, do expect it to change along with the number of cases of coronavirus, hospitalizations, and deaths from Covid-19. Leaders know that residents do need to buy and sell homes, and they are working on a path forward.
Meanwhile, you can work on your pre-approval, or better yet, a pre-underwritten approval which will enable you to buy faster once that is more possible.