On paper, it’s business as usual.
But in reality, it looks vastly different.
The COVID-19 pandemic has turned the world upside down as major cities around the world, including Denver, have elected to shut down in hopes of slowing down the spread of the virus.
On Monday, March 23, Denver Mayor Michael Hancock issued the “shelter in place” order, requiring Denver residents to stay at home except for essential activities, like buying groceries, or providing services that are deemed essential, like doctors and nurses providing medical care. A couple days later, Gov. Jared Polis did the same thing, but for the entire state.
The order has businesses scrambling to determine if they are deemed essential or not. Real estate, it turns out, is essential, which is not the case in every state right now. But that doesn’t mean homebuyers should expect to do a dozen showings this weekend or sellers should necessarily go forward with their listing plans in the coming days.
Hancock’s order is through April 10, which means there are going to be some adjustments over the next few weeks. Here’s what you need to know:
Hit the pause button
Everyone interviewed for this article said the same thing at the top of the conversation: The health and safety of employees and clients is of the utmost importance. There are houses and condos for sale today and there will be houses and condos for sale tomorrow, the next day, the next week, the next month and the next year. The top action everyone in the world can take right now is practicing social distancing and staying inside. If your real estate needs can wait a month or two, that’s likely going to be your best plan of action.
Our deal is pending. Can this virus kill the closing?
Thankfully, due to technology and the perseverance of the entire real estate industry, deals can still close, keys can be exchanged and that celebratory bottle of Champagne to celebrate your new home can still be enjoyed.
That being said, the spread of the virus could impact things. As of Tuesday, March 24, though, there’s a new contract addendum tied to COVID-19 that can help keep deals in place. The Colorado Bar Association approved the addendum that real estate brokers can use to pause pending deals where the parties want to close, but can’t due to circumstances caused by the coronavirus. If a buyer is ill and can’t make it to closing, for instance, this is a great way to simply slow things down and hopefully close a few weeks later.
What about all of the closing documents that need to be signed and notarized?
Passing pens back and forth in a small room is the complete opposite of social distancing. That’s why many title companies have quickly adapted to today’s circumstances.
Penny Crook, with Canyon Title, said the company is offering “door closings,” which allows the signor to show a notary his or her identification through a window for verification and then watch them sign the documents through that window.
Documents that don’t require a notary’s signature can be signed by the buyer or seller in the comfort of their home with the notary being available to watch via FaceTime, Skype or some other video-calling service. Once those documents are completed, they can put them on their front porch and the notary will retrieve them.
And more changes are coming soon. The Colorado Bar Association announced the Colorado Secretary of State is preparing to issue emergency notary rules later this week that will allow remote notarizations through video-calling platforms.
While the door closings are preferred during this order, an in-office closing is still possible. Crook added that all appointments would be spaced out to avoid any client overlap in common areas and that each closing room would be disinfected ahead of those appointments.
Will my deed get recorded?
It will, but expect that to be delayed. Only a few Colorado counties at this point are completely shut down. Most counties, including Denver, Jefferson and Adams counties, allow for e-recording. Documents submitted via e-recording are placed “in queue” and will be recorded in the order they are submitted. Many title companies are insuring the gap period as they typically would.
I’m looking to sell. Wouldn’t iBuying be a safer bet right now?
In theory, it probably would be, but the big players in iBuying — Zillow, Opendoor and Redfin — have all hit the pause button on that side of the business during the pandemic. If it’s dire that you sell immediately, working with a Realtor to carefully get the house setup and host virtual tours until some buyers are highly interested is really the only path at this point.
I’m a buyer looking to find a place relatively quickly. Can I still check out properties and go under contract?
The short answer? Yes.
The longer answer? Yes, but…
Social distancing obviously needs to be practiced. That’s why it’s important to first take virtual tours, which many real estate firms, including Denver High-Rise Living, are offering. Most Realtors realize that photos aren’t enough to fully take in a property, but a video with feedback from the agent can help immensely in narrowing down decisions. Once you’re down to a couple properties, you can safely prepare for a showing in person.
Are lenders still offering mortgages during COVID-19?
Yes and, again thanks to technology, many aren’t skipping a beat as their loan originators work remotely. Eric Kulbe, with Synergy One Lending, said his clients can apply for a loan using the company’s mobile app, where they can upload all necessary documents from their homes.
But how is the virus impacting mortgage rates?
It’s funny, Kulbe said, because rates hit an all-time low two weeks ago, but then spiked up as the number of coronavirus cases grew around the world. That drastic spike — more than a full percentage point — wasn’t because of the pandemic, though.
“It was all about supply and demand,” Kulbe said. “We were flooded during the week of the record-low rates and all mortgage companies simply couldn’t keep up. When that happens, rates gets pushed back.”
Rates, as of Tuesday, March 24, were back in the mid- to low-threes, Kulbe said. He anticipates rates to potentially even go lower again in the future as the federal government works to keep those rates low and people in their homes.
Can my house be appraised during the COVID-19 pandemic?
The state government has also relaxed its rules for appraisals during this time. For a majority of owner-occupied residences, appraisers can now do drive-by appraisals and use data on the home that’s available online.
So, the mortgage industry really hasn’t changed much during this crisis?
Well, there are some concerns.
First, loans that aren’t government backed, like jumbo loans with higher debt-to-income ratios, are being impacted in a big way, Kulbe said.
“All of that private, portfolio-type money in those markets is starting to go,” he said.
Mortgage originators are also going to be more diligent near closings to verify employment and income hasn’t changed as the number of unemployment claims rise across Colorado.
What are other real estate concerns should I have as a buyer during the coronavirus pandemic?
Inventory remains tight and if potential sellers are holding back and waiting for the virus to clear up, it’s going to become even tighter. Basic supply and demand dictates that prices will go up.
“When it comes to condos, Denver is already behind current demand by 18,000 units,” said Lori Greenly, founder of Denver High-Rise Living. “So, if people are on the fence about listing — and when they feel comfortable doing so — it will be a great time to list.”