The world continues to persist in a state of panic, fear, and stress due to the COVID-19 global pandemic that will not go away.
The biggest challenge that the world’s populations face is the fact that the SARS-CoV-2 virus’s infection mechanism is via person-to-person transmission.
It is incredibly infectious, resulting in people’s need to social distance, wear masks, or face coverings to prevent the virus from spreading.
The Canadian government website notes the following about the COVID-19 pandemic.
“COVID-19 is a serious health threat, and the situation is evolving daily. The risk varies between and within communities, but given the number of cases in Canada, the risk to Canadians is considered high. We continue to reassess the public health risk based on the best available evidence as the situation evolves.”
Life must go on.
The global community seems to be adjusting to living their best lives within the novel coronavirus pandemic.
And part of living life includes buying and selling residential properties.
Real estate brokers like Chestnut Park Real Estate have adjusted their business processes, ensuring everyone’s safety, from the buyer, broker, and onto the seller and their individual families.
Here are several ways to help you buy a new home in the COVID-19 pandemic.
- 1 Understand that the competition over a single property might not be as intense as before
- 2 Accept a digital tour of the home
- 3 You might need a higher credit score
- 4 You might have to put a bigger deposit down to secure home purchase
- 5 You might need to self-fund the total purchase price of a new home
- 6 You might find yourself going it alone
Understand that the competition over a single property might not be as intense as before
Buyers are still out there, but they are dwindling, even in the luxury residential property industry.
This fact has both pros and cons.
Pros because you are more likely to get your hands on a sought-after property at a reasonable price.
And cons because sellers are not putting their homes on the market, because of the depressed prices and the fact that home buyers traditionally visit all of the homes on the market in their category to get a feel of the house before they put in an offer.
The coronavirus pandemic has left sellers wary of allowing unknown buyers into their homes.
Accept a digital tour of the home
To a large extent, life in 2020 has moved from in-person or face-to-face communication to digital communication.
Work meetings, family gatherings, and meeting up with friends have all moved to digital apps like Zoom or FaceTime.
It is a good idea to ask your real estate broker if they can arrange a digital tour of the home you are interested in.
The agent or homeowner will either conduct a live Zoom tour while walking through the home.
The broker might also have pre-recorded videos, 3D walkthroughs, and interactive floor plans available for potential buyers to view.
While a digital tour of the home you wish to buy might sound strange and uncomfortable, statistics show that in-person tours are no longer happening.
Brokers who offer 3D home tours have seen a 408% jump in usage by both agents and clients.
You might need a higher credit score
If you are going to finance your new home during the pandemic, you will more than likely need a higher credit score.
The global economy has moved into a recession that is as bad as the 1930s Great Depression.
Financial institutions and mortgage brokers are not willing to take any risk at the moment.
Major players like JPMorgan Chase have announced sweeping changes to their loan requirements.
Lenders are now required to have a 700-credit score and a 20% down payment or deposit on any new home loan.
You might have to put a bigger deposit down to secure home purchase
As described above,
Mortgage brokers and big financial institutions are asking for a higher down payment for a home mortgage.
In other words,
These institutions are increasing their risk aversion strategies by reducing the amount of money they loan to an individual buying a house.
Apart from a more significant down payment, some mortgage brokers are also asking potential home buyers to prove that they have at least three months of mortgage repayments in cash reserves.
This is fundamentally due to the continued market uncertainty caused by the ongoing COVID-19 pandemic.
You might need to self-fund the total purchase price of a new home
Because of the mortgage brokers’ and financial institutions’ risk-aversion strategy, you might find yourself in a position where you will have to pay cash for your new home.
As an aside,
Every new home buyer might find themselves in this scenario irrespective of the sale price.
This is not only particular to entry-level house sales but luxury homes as well.
You might find yourself going it alone
Social distancing rules have affected every part of the home-buying process, not just whether you can view a for-sale home in-person or not.
Legal and financial documents must also be signed before the sale is closed.
You might find yourself signing these documents digitally. If not, you will have to meet with lawyers and brokers by yourself without any support from family members or friends.