Shark Tank star and real estate icon, Barbara Corcoran, is the latest to weigh in, telling TMZ that, “Now's the time to score a steal,” they said. “She told us buyers who are willing to pay special attention to details can find properties discounted by as much as 25%. She's seen it happen in NYC, and says that kinda deal won't be uncommon due to the harsh economic reality facing millions of Americans. She says if sellers are willing to list right now during a pandemic, it's likely because they're desperate to unload the property. That adds up to great deals...if you're able to buy now.”
So, if you’re looking to make a move right now, what do you need to know and what should you be looking for?
Distressed properties
Yes, it’s crass to say that one person’s loss is another’s gain. But the reality is that some of those whose jobs and/or finances can’t withstand an economic downturn may end up losing their homes. It’s not out of line to think that there is going to be a new wave of foreclosures related to job loss and financial hardship, even with mortgage companies and banks offering assistance. Unemployment will help, as will the government’s economic stimulus package…but, it only provides a small amount of assistance that may cover one month’s mortgage payment or a few bills, and not much else.
Between the low mortgage rates and the potential for home prices to come back down if there is a glut of distressed properties that hit the market, there could be a good buying window for buyers.
Investment properties
This could also be a good time to consider real estate as an investment tool—especially in light of the recent stock market drop and those low mortgage rates.
“With historic low rates, it is a good time to consider investing in real estate,” Victoria Shtainer, a real estate agent and expert at Compass in New York, told Realtor.com. “Low rates give you more buying power, and we have been negotiating amazing deals for our buyers. Given the current volatility in the stock market, investors are reassessing asset allocations in their portfolio, and considering how real estate may fit into this from an asset allocation standpoint.”
Realtor.com added that buying an investment property “can be a valuable asset and a good way to generate passive income, and it might also provide tax write-offs and incentives that you wouldn’t get on other instruments.”
For a historical perspective on real estate vs. stocks, check out this piece by Bigger Pockets, which provides a ton of data points as well as this nugget: “Throughout modern history, residential real estate has actually boasted an extremely high rate of return with low risk. “
A few things to keep in mind when buying now
Given the current situation around the coronavirus quarantine, the way you buy a home will likely be different. You can’t expect open houses or, in many cases, in-person home tours, right now (Although, you’ll likely walk through a home you wish to purchase with an inspector during your escrow process.). Your escrow timeline may also be impacted.
"I recommend working with your lender early, even before the offer is accepted," Beatrice de Jong, consumer trends expert at Opendoor, told Business Insider. “The home buying process is taking longer than usual, and you could end up waiting around if you don't get a jump start.”
The delay is partially due to the fact that lenders have been inundated with refinancing applications from existing homebuyers, but also because of work-from-home mandates that limit what some of the professionals involved in the process can do.
“Yes, the influx of refinancing applications has overwhelmed lenders — but that's not the only reason the process is slowing down,” they said. “Many companies' employees are now working from home, which sometimes hinders them from working as quickly.
That can affect multiple aspects of the escrow process, like the appraisal. “The appraiser physically has to go out to the house...Many of them are actually asking to have quarantine clauses built in,” Andy Taylor, General Manager of Credit Karma Home, told Business Insider. “They want to know that the home they're going to isn't under quarantine because someone there is sick from this virus that's going around.”
