How to Be the Most Prepared Buyer on Day 1 of Post-Quarantine
Due to stay at home orders, real estate activity has been extremely limited, preventing realtors and clients from seeing available properties. But even though it may feel like it, quarantine won’t last forever, and there are proactive things you can do to prepare for when the PA real estate market fully re-opens.
One of the first steps in becoming an approved buyer is going through the mortgage pre-approval process. If you had previously been pre-approved and have undergone an employment change, change in pay, or have any added debt, you’ll need to get a new pre-approval that reflects your current financial status. I spoke to my friend and co-worker Maura McDonell on updates to mortgage pre-approvals and she spoke about the importance of the following items:
Let your loan officer know about any changes to payment schedules, added credit card debt, or a missed credit card payment, and make it a point to discuss your employment status as well.
If you’ve been furloughed and/or are receiving unemployment compensation be sure to disclose this information. Unemployment compensation cannot be counted as income, and if the amount you were previously compensated is different now than before COVID-19 disruptions, you will need a new pre-approval that reflects decreased pay.
In regard to FHA loans specifically, there are two factors that have changed. The minimum credit score needed to qualify is now 620, whereas it was previously 580. And, if gift money is part of your purchase (from parent or family member), the maximum debt to income ratio for an FHA loan approval is 45%.
Be sure to check with your lender (bank, mortgage company, credit union) on any changes you’ve experienced financially so you can receive an accurate pre-approval that allows you to jump back into the market after stay-at-home orders lift.
Some of that information may seem a tad bleak, but if you have undergone a change of income or employment status, that doesn’t mean you can’t still purchase a home that works for you––instead, let’s talk about your situation and how you can reach your goals. Re-examining your budget, what kind of house you can afford, and the amount you’re willing to and can afford to put in is helpful even during “normal” times.
Another change to watch out for is altered lease terms. If you’re currently renting, did your lease terms change at all during the pandemic? Are you going month-to-month now, or did you move into a new place? These are good things for your realtor to know in terms of timeline and budgeting.
I would also recommend checking in with your realtor in fine-tuning your MLS search. This will help you receive alerts regarding houses whose status have changed recently. Many houses have gone from inactive to active and vice versa during this time. You can keep your knowledge of available houses up-to-date by re-evaluating your MLS search filters and keeping in contact with your realtor.
While you’re browsing during quarantine for houses online, confirm with your realtor that listings are active not just on the consumer sites such as Zillow and Trulia, but also active in the MLS. Many listings on consumer sites can be expired, inactive, and sometimes, not even real. Before you get your hopes up about finding the perfect property, confirm that the property you’re dreaming about is a real, active listing that will be available for viewing once stay at home orders cease.
Once you do confirm that a property is available, a fun and proactive activity to do while we’re bunkered down is a drive-by of properties you’re interested in. An in-person look at the exterior of the house can confirm your interest or cross a property off the list, making your list of potential homes smaller and more targeted, and therefore facilitating the home searching process for post-quarantine. Speeding up this process will give you an edge in the market, as many people will be looking after stay at home orders are lifted. In an already competitive seller’s market, you want any advantage you can get, so speeding up your process by even a day or two could really help you in the end.
On that note, a few houses did sell during stay at home orders through virtual tours, but not a lot of buyers wanted to close on houses they didn’t see (understandably so). Video doesn’t take the place of what a space looks, feels, and yes, even smells, like in person. Make looking for a house a priority even though your social calendar and work calendar will be busier after stay at home restrictions lighten up. Other buyers will be out there ready to pull the trigger as well, so be prepared to make an offer.
We don’t have updated PA real estate guidelines regarding in-person activities yet, but be prepared to exercise caution when we’re allowed to tour properties again. We may need to continue precautions such as wearing masks and/or gloves, using hand sanitizer, and limiting the number of people in a property at one time. That’s right––you may not be able to bring a parent, sibling, or friend along to view the property, and there could even be time limits on the property viewing, especially if the home is still occupied. Nothing is confirmed right now, but with the serious safety precautions in conjunction with COVID-19 efforts, we should be prepared for unconventional practices, perhaps even continuing to hold virtual closings (but hey, you can pop the champagne right in your own kitchen!)
At Remax Ready, we like to be prepared and prepare our clients as well. Keep in communication with your realtor, check in on your finances, continue your search, and be ready to pounce when the market is back at its peak. We’ll get through this with a little bit of prep and a lot of patience.