How The Real Estate Industry Is Responding to COVID-19

Fivewalls: How The Real Estate Industry Is Responding to The Coronavirus COVID-19 Pandemic

Last Updated: May 07, 2020

How Real Estate Agents Are Helping Home Buyers

While it’s no surprise that video and virtual tours have been around in real estate for a while, COVID-19 has forced more real estate agents to offer these services to minimize interruptions for home buyers. We expect to see that video and 3D tours will become a normal prerequisite to viewing a home in person.  People will view less homes and real estate agents will offer to pre-visit the homes to take a live video if the home doesn’t have a 3D tour. 

 

Having a real estate agent representing you will become something you need to do early on in your home search. Many sellers will now not let buyers into their home with out agent representation. Agents will also become a key factor for when you want more detail of a home as they can go and take a personalized video tour for you.

 

Real Estate Contracts Are Being Updated to Account for Changes Due To COVID-19

E-signatures will become the standard practice moving forward when signing purchase and sale agreements as well as third-party related closing documents.  Regional real estate associations have also rolled out additional schedules to contracts for speciality clauses relevant to COVID-19.  This is done to protect buyers and sellers from delays in closing the home due to unforeseen potential closures to entities they rely on to close the sale.  A buyer may need to buy a home without viewing it first but their real estate agent can put in special clauses that can put contingencies in place so that buyers can either view the home or have a home inspection before the deal firms.  While that may seem unlikely, the real estate industry has been forced to adapt quickly to minimize interruptions for both buyers and sellers.

 

Impact on Home Sellers and How Selling A Home Has Changed

Having a progressive real estate agent who already knows how to use video software to market homes is proving to give those sellers an upper hand compared with real estate agents who do not use digital software.  Video and 3D tours will allow potential buyers to view the property in detail before they go into the home and for the rest of the year, we expect to see this trend continue.  It will take more effort for a home to sell as home buyers are unlikely to purchase a house without seeing it in person.  In the short-term, there are no tools available to replace the in-person experience. As a result, real estate agents have started to offer to do online live showings to improve the visibility of homes and answer questions from buyers. 

 

Could Virtual Staging Replace Traditional Home Staging?

Another trend we are seeing is the impact on home staging.  Since social distancing has affected home stagers’ abilities to move furniture between different homes, virtual staging has been adopted more over the last few weeks.  It allows real estate agents to stage a home using pictures of furniture.  Since it has not been used wisely, if a home has virtual staging, it must be clearly disclosed on the listing to ensure that buyers understand which appliances are included or not.

 

Virtual meeting software can allow you to host a “virtual open house” when potential homebuyers can ask questions about the home and have a live tour without ever having to step foot in the home.

 

No Surprise, Open Houses Are Strongly Discouraged and Will Be for A While

Canadian real estate associations have reacted differently on having open houses.  One thing they have in common is discouraging open houses and even in-person showings.  Many real estate boards have not directly their members to cancel showings and open houses but they are strongly recommending that they limit and cancel these practices temporarily. Here is what some provinces are doing in reacting to open houses:

 

  • Ontario: The Real Estate Council of Ontario (RECO) has only strongly recommended that brokerages and salespeople limit showings and directing that open houses be ceased.
  • British Columbia: The Real Estate Council of British Columbia (RECBC) has taken a similar stance to Ontario in recommending that open houses and in-person showings be limited or cancelled.
  • Alberta: The Alberta Real Estate Association (AREA) has banned open houses for the time being.

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How US Real Estate Companies Have Responded to The Coronavirus

Like Canada, the US has also quickly responded to the impacts of the Coronavirus to real estate.  We have looked at how Zillow and Opendoor have responded given that those companies hinge on doing real estate traditionally and the up-and-coming trend of iBuying.

 

Zillow is the largest listings site in the US and has the largest percentage of unique visitors to their website for real estate.  They have put advisories to their listings with open houses as well as notices to encourage social distancing and the use of virtual tours, such as Zillow 3D Home Tours and video consultations.  For their core business model, Premier Agents, which is advertising for real estate agents, Zillow is covering 50% of their Premier Agents’ fees for April.  They are also offering discounts and/or extensions to their other partners such as Zillow Rentals, Mortgages and New Construction businesses.

 

Opendoor is an iBuyer model where the company offers sellers cash upfront on a property then they go to list the property on the market.  The idea is that sellers do not have to go through with the stress of doing showings and can control the time they would like to close.  Although this model has generated some criticism because they charge a higher fee than traditional real estate agents, this model has been taking up as much as 5% of the real estate market in some US cities.  The iBuyer model would have seemingly been welcome during COVID-19 given that sellers can avoid having strangers in their home.  However, Opendoor has paused all of their cash offers on homes and in doing so, have temporarily stopped doing business.  At Fivewalls, we estimate that the company has done this for safety reasons but also to reduce the risk of holding onto properties when prices may drop. 

 

Furthermore, Opendoor is still allowing third-party cash offers for homes they still have on the market and are connecting sellers with one of their partner agents if they need to list their home for sale. For home buyers they have suspended self-tour access of Opendoor homes and on-demand tours or non-Opendoor properties. However, they are still scheduling tours by appointment in special circumstances and have required precautions when viewing properties.

 

How are real estate agents responding to the pandemic?

3 agents on how they have been continuing to help clients:

 

Jennifer Romain (Toronto):

"Usually, I love to meet clients face to face especially our first meeting to discuss their real estate needs, however since COVID-19, this is no longer possible so I have been using a lot of technology and doing things virtually as much as possible, from virtual tours, video chats and all paperwork to be electronically signed. If showings must be done, it is important to protect everyone involved, the buyer, the seller or tenant and the agents and have a COVID-19 kit with disposable gloves, hand sanitizer and wipes." 

 

Eduardo Andrade (Ottawa):

"I'm reaching out to my past and current clients and checking in to know how everyone is doing and if there is anything I can help them with (non-real estate related) and I'm serving people who have the necessity to move soon either to sell or buy their home or both."

 

Vicki Burbank (London)

"I have been utilizing a LOT of visual aids during this market and with 21 years in the business, it is great to know so many realtors in my area that I can chat with and reach out to on behalf of my buyers/sellers." 

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Disclaimer: given that the Coronavirus (COVID-19) has caused shocks to how real estate is operated, please note that the information above could change at any time given that companies are constantly updating their policies in response to the pandemic. Intended to Solicit Buyers or Sellers that are not currently under contract with another real estate brokerage. 

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