Should I Buy Or Sell A House Now?
Can I Buy A House Now?
Yes. People across the country are practicing social distancing, or, in some cities, following public health orders to stay at home. In Nashville, real estate has been deemed essential so the affiliated businesses surrounding a real estate purchase are all functioning fully.
Can I Tour A House Without Leaving My Home?
Yes. There are a few ways agents can help you to get a better sense of a property that interests you:
- Pre-recorded video tours
- Live video walkthroughs with Facetime or other video chat tools.
Also, many listing agents are investing in virtual tours so ask your agent if a professional video or 3D rendering is already available.
I'm Not Ready Now. What Can I Do To Be Ready To Buy?
If you aren’t ready to step out just yet, there are still steps you can take now so you’re ready to act when the time feels right.
- Find your price range.
There is likely a difference between what you can afford and what you should spend. Online calculators are helpful, but we’d encourage you to have this discussion with your agent and a lender in advance. Ask a lender to check your credit to ensure that there aren’t any unexpected hurdles on your report that should in addressed.
- Keep saving if possible.
Continue setting money aside for your down payment. The amount can vary: It can be as much as 20% of the purchase price, but it also can be lower with conventional loans or if you qualify for an FHA or VA loan. You’ll also need funds to cover closing costs, moving, and other expenses.
- Gather info and advice.
Look at homes online to see what’s available in your price range. Think about your must-haves and nice-to-haves so you can focus your search when you’re ready to take the next step.
- Identify pre-approval materials.
A pre-approval letter is usually valid for 60-90 days. You may not need it yet, but make sure you have (or can get) the documents you’ll need, such as tax returns, W2s, paycheck stubs, and bank statements. Lenders may also want to see evidence of your down payment. If you’re getting help from friends or family and the money isn’t in your account, you may need to secure the funds prior to pre-approval or provide documentation showing when the funds will be available. We recommend placing all of these documents in a Dropbox or Google folder for quick access when you are ready.
Am I Missing Out If I Don't Buy Now?
The best time to buy depends on your personal circumstances. Trying to time the market for the best deal is something even professional investors aren’t very good at. According to most economists, the current environment poses both opportunities and challenges. The opportunities are not as obvious as the challenges, but they’re out there.
- Mortgage interest rates are very low, which has the potential to significantly boost your buying power.
At this exact moment, with many people pulling back and staying home, there could be less competition for the still-limited pool of homes for sale.
- Sellers may be more flexible on pricing and/or timing in order to close a sale, especially if letting their home stay on the market will cost them or delay their own plans.
- If demand stays strong and the crisis passes relatively quickly — both big “ifs” at this moment — then we can probably expect price growth to accelerate like it was earlier this year. If that’s the case, it might be a good time for some buyers to get ahead of any growth in home prices.
Still, the challenges are daunting:
- Inventory is already low, and it’s unlikely that many would-be sellers will list their homes right now. That could make it harder for you to find the right home.
- Mortgage interest rates are low but volatile — and lenders are working through a flood of refinance applications. For would-be buyers who secured financing in early March, this may not be as big an issue. It’ll be a lot tougher if you have not yet started the mortgage process.
- If the crisis persists and social-distancing and other behaviors last through the bulk of the year, home prices may fall somewhat in response to the lack of demand from buyers. It could make sense for some buyers to wait to see if the home they’re eyeing today is available at a lower price tomorrow. However, we do not anticipate this in the Nashville market.
If you have the time and willingness to face the current challenges, now could present some interesting opportunities. But you should have a plan to ensure you can back off and/or re-evaluate as the situation unfolds. If you’re risk-averse or don’t feel ready, you’re likely to be more comfortable waiting until the situation is more clear.
Should I List My House For Sale Now?
The National Association of Realtors tells us that, as of the third week of April, buyer activity is down by about 20%. Three weeks ago that number was 40%. Buyers are starting to come out.
At the same time, listing activity is down even more. In most areas, available listings are down by 40 or 50% of where it normally is at this time of year.
These numbers and statistics can vary widely depending on the market segment. It seems that buyers looking in the lower price points are out in full force. Whereas buyers looking at higher and price points have pulled back. Some of this may be due to the fact that mortgage markets have tightened. The availability of jumbo loans has diminished significantly.
For most sellers, deciding on whether to list now or not will depend mainly on need and circumstances. If you have a vacant home, I would encourage you to go ahead. If you have children or elderly at home, it may be wise to wait. Anything in between, will obviously depend on your comfort level.
New Protocols & What To Expect
Real estate has been deemed essential by the governor, so all aspects of a transaction can happen now. Showings, inspections, appraisals, and closings are still happening. But they may be happening a little bit more slowly. Most lenders are telling their buyers to request 45 days escrow as opposed to the normal 30 days.
Because gatherings of more than 10 people is not allowed, open houses are not an option at this moment.
It is not unusual for sellers to request that buyers wear masks and gloves during their tours.
Most listing agents are investing in either video or 3D tours that somewhat reduce the need for buyers to book in person previews. You should insist on this when listing.
In years past, the typical home buyer would look at between eight and 12 homes before deciding on one. In this environment, it seems that most buyers only tour 3 to 5 listings before making a decision. This results in fewer showings but more serious buyers.