blogs / 01 MAR 2021
How Times Have Changed: Buying and Selling During a Pandemic
A Cartus employee shares her experience of selling and buying a home during the pandemic and how the process has changed to a mostly virtual experience. Read on for the good and the bad—and helpful tips—in this “new normal” of real estate transactions.
Colleen Smith and her husband decided that it was a good time to upgrade from their townhome to a larger, single-family home. Great idea, except… it was during a global pandemic! We wanted to hear the details of her experience firsthand, and she was gracious enough to share them in this interview.
“All in all, things worked out well for us, and we found our ’forever home‘—but it was definitely a rollercoaster! I hope our experiences will help future buyers find their perfect homes.”
To set the stage, both properties were located in Fairfield County, Connecticut. The biggest surprise to Colleen and her husband was discovering just how many people were relocating from New York to Connecticut at that time. “It’s a sellers’ market,” she said, “and this was evident on both the buying and selling sides. It was great when we were selling our townhome, but not so much when we were competing with so many others to find a new home. Many New Yorkers were bidding on properties sight unseen and they came with cash offers higher than asking. We lost out on several properties for this reason.”
What went well in the process?
“We got an offer on our Townhome for full asking price five days after listing in September! Unfortunately, that sale fell through due to financing issues. We listed again the day before Thanksgiving and had three more showings on Thanksgiving Day, which resulted in another offer.
We really didn’t repair much prior to listing, either. We thoroughly cleaned and did minor paint touch-ups—but no major work—and we still got offers. We do wonder if we had made more repairs, would we have gotten more—or higher—offers?
The final closing itself ultimately went very smoothly with no hitch. Everything was done online. Super easy.”
What didn’t go so well?
“The appraisals were tough because the appraisers were so busy trying to keep up with a rapidly changing market. Home values were increasing daily, so the appraisal would change from month to month. From our first offer in September to our second one in November, the appraisal increased by $10,000 in a 2-month period. We sold for less than we would have liked, simply because the appraisal was still slightly behind actual home values and our buyer needed financing. If we’d had a cash buyer, we likely could have sold for a higher price.
I still wish we had done a preemptive 'Make Me Move' or 'coming soon to market' option, where buyers would have been alerted prior to the home actually being listed. Sellers that did this seemed to have buyers waiting in the wings when they finally listed.”
What went well?
“Everything seemed to move quickly. We searched for homes on Zillow, saw the ones we could in person, and made offers. The virtual process seemed to speed everything up, including the mortgage and closing. We never even met with the sellers at closing—everything was done virtually or through our attorney and agent. The home appraised exactly at our offer price. We also felt perfectly safe and secure uploading our information remotely for the mortgage.”
What were the challenges?
“Too much competition! I would find a house we liked and have a showing scheduled the same day, but the very next day it would have multiple offers. Many times we couldn’t even get in to see the homes in person. Since we needed a mortgage to purchase, we felt we were at a disadvantage competing with all-cash, out-of-state buyers. Luckily, we did not need to make our offer contingent upon selling our townhome, so that helped. We did lose out on three homes we really wanted to out-of-state buyers, but ended up in a beautiful home in the end. We had put an initial offer on this home for $5,000 more than asking price. Then, we saw a car with New York license plates drive up for a showing and panicked! So we increased our offer another $4,000—and included a very personalized letter to the seller. Ultimately, our offer ended up being accepted, but it was nerve-wracking!”
What has changed about the overall process of buying and selling?
You don’t sit down at a closing table with buyers (or sellers) anymore. Everything is done virtually and online—uploading documents as needed and signing paperwork at the attorney’s office. Nothing is face-to-face.
There was no “casual viewing” and many sellers didn’t want buyers viewing their homes in person at all. Many buyers were OK with this—they were purchasing sight unseen—but we really wanted to see the homes in person. If buyers were allowed to see a home in person, there could only be two people in the home at a time and they needed to take standard COVID precautions. Often, buyers would be required to wear booties over their shoes. Sellers only wanted to entertain VERY serious buyers, so there was no opportunity to have additional family members view the home.
Most sellers also didn’t want to show their home to any buyers who were not pre-approved for a mortgage. Many times buyers had to show their “pre-approval” letter as a prerequisite to schedule a showing.
Key learnings and tips?
Know your financial situation well before you start the process. Have enough funds ready to avoid making contingent offers, if possible. You may be at a disadvantage if your offer has contingencies and you need cash from the sale of your other property as a down payment.
Buying a home is an extremely personal investment and it can get very emotional (especially if you fall in love with a home). Many times in a competitive market, it becomes tempting to make “as is” offers or to waive your inspections altogether. Do not do this. Take your time and do your due diligence so you do not regret major repairs in the end. You can always negotiate with the seller—or at least take a calculated risk—once you know more about the home.
Local banks may offer more flexible or faster service. We were able to get our pre-approval the same day, and our local bank was super accommodating to our specific timeline of needing to be settled before the school year started.
We wish we had known beforehand what we were up against, so we could have been more emotionally prepared for the level of competition on the buying side. Know your market well—and who your competition is.
Since competition may be stiff, be sure to include a personalized letter in your offer, and do your homework to influence the seller. Notice what seems to be important to them and use it in your letter. For instance, we noticed there were photos of children in the home and we also have two children, so we used that in our letter to form a common bond and let the sellers know we were excited to be able to raise our sons in such a wonderful and warm home—just like they did.
Consider using a “coming soon to market” strategy.
Ask your agent what you should do to prepare your home for listing. You may think you need to renovate much more than the market actually requires. Your agent is the expert.
Be ready to move quickly on both buying and selling sides!
Be prepared to manage the process with your lender. Since it’s a virtual process, you won’t be able to “pop in” to their office to make sure things are moving along—so set timing expectations early, be specific, and call often to assure everything is on track.