As a result of the coronavirus and COVID-19, along with stay-at-home orders and economic difficulties, life for most Americans has irreversibly shifted. And many say this new paradigm will persist and become the new normal. Real estate, while still chugging along to some degree, has also been affected – not only by health concerns engendered by the pandemic, but also by a volatile stock market, unemployment, and fears of a recession. So, as we enter the busiest of all home buying/selling seasons, what will things look like? To help answer that question, we’ll examine 5 ways buying a house will be different in Little Falls this summer.
1. Change, Uncertainty, and Market Swings Will Rule
One easily observable way that buying a Little Falls house will be different this summer is in the changes from the traditional way things have been done. The home-buying process will be different in a host of ways – from virtual home tours to COVID-19 clauses in contracts to the closing process.
In addition, uncertainty will also color everything. These uncertainties – both potentially positive and negative in outcome – include “how coronavirus is impacting the housing market overall, what to do if you’re worried about paying your mortgage and whether a pandemic-caused recession might help some families finally afford a house.”
There will also be hard-to-predict local-market swings. According to industry watchers, “residential real estate looks very different depending on the city. It’s a complex situation that’s changing not just by the day or week, but by the hour.” The good news is, that here in Central Minnesota, the market continues to be strong for this time of the year. So be sure to contact me to find out what’s happening in the Little Fallsreal estate market when you are ready to buy or sell (or both). (To discover more, just call (612) 810-3907.)
2. Pre-Approval Will Be Even More Important
Real estate pros always advise buyers to get pre-approved for a mortgage before setting out to do any serious house hunting. Another change is that pre-approval will be more important than it has ever been this summer as we are asking all our buyers to have this in hand prior to scheduling home showings. And you don’t have to risk your health to do it now.
“[G]etting preapproved before you make an offer on a house is a must. You don’t have to leave home to get preapproved; you can submit an application online or over the phone. And if you’re in a hurry, let me know and I can help direct you to local Minnesota lenders who can you speed through the application process.”
3. Showing/Viewing Homes Will Move Online
A big way that buying a house will be different in Little Falls this summer will be in how houses are shown by sellers and viewed/toured by buyers. A large portion of it is going online and going virtual.
“Virtual home tours and live-streamed open houses are replacing in-person showings. Nearly three-fourths of real estate agents in [an] NAR survey said they’d seen home sellers stop holding open houses.” Real estate pros are advising buyers to adapt to these new conditions and to take precautions for the rare in-person viewing. For our Sellers we have created 3D tours and video for buyers to get a closer look at a home, to narrow down the showings to those that they are truly interested in. We are doing Open Houses here in Central Minnesota, but have a number of procedures in place that help to ensure social distancing and safety for our Sellers and Buyers!
4. Appraisal, Inspection, and Closing Protocols Will Change
Similarly, appraisals, inspections, and closings are other aspects of how buying a house will be different in Little Falls this summer. Precautions must be taken to reduce exposure to the coronavirus, and these are areas where this will be felt.
“Protocols for home appraisals have also changed. Fannie Mae and FreddieMac, the government-sponsored mortgage giants, have directed mortgage lenders to reduce the need for appraisers to perform in-home inspections, allowing greater flexibility for drive-by appraisals for conventional loans.” Locally, we have seen some Conventional Loan appraisals that have been conducted by simply driving by the property and utilizing MLS photos and videos.
Further, some home inspections will take place without the typical presence of “homebuyers tagging along with the inspector – although some inspectors are using video chatting apps to let buyers join them for the inspection remotely in real-time.”
And then there will be far more e-closings in states that allow it. Basically, e-closing allows almost all of the processes to take place remotely and electronically, thus keeping all parties safer. Here in Minnesota all the transaction paperwork and be done with electronic signatures. The closings In Minnesota, however, still require a “wet” signature . The Title and Closing companies are currently only allowing the parties that have to actually sign come to the closings (So your Lenders and Realtors don’t currently come with). A number of Title companies are also offering “curbside” closings, where they bring the paperwork to the car and have you sign, without you needing to go into the business.
5. Lending Requirements Will Tighten
Lending requirements will also likely get tighter this summer – even though mortgage interest rates are at near historic lows.
Owing to the coronavirus, here’s what happened: “The Federal Reserve implemented two emergency interest rate cuts since the coronavirus outbreak, bringing the yield on Treasury bonds to almost 0 percent. Furthermore, the stock market dips can have an effect on interest rates, too. When investors start thinking the stock market is too risky – like right now – they sell their stocks and buy bonds. The increased demand pushes the price of bonds higher. The higher the price of bonds, the lower the interest payment – called the yield – is relative to the price. Basically when bond yields are lower, mortgage rates are lower, too.”
Lower interest rates also mean more people refinancing , which can ultimately cause the reverse in having interest rates raised to slow down that flow if lenders get too busy.
One downside is that it may be harder to get a mortgage with higher credit scores required. “Chase now requires borrowers to have a 700 credit score and a 20 percent down payment to get a mortgage.”
How Buying a House in Little Falls Will NOT Be Different This Summer
There are, in fact, more than these 5 major ways that buying a house will be different in Little Falls this summer, but these should help you be prepared for what lies ahead. But one thing has not changed and has become even more critical – and that is the necessity of having a qualified local Realtor in your corner. Be sure to reach out to have me help navigate the changing landscape for both Sellers and Buyers.