How to Buy or Sell Your Home During COVID-19

Buying or selling a home during typical economic and environmental conditions is time consuming and challenging in and of itself. But trying to buy or sell right now with quarantine, an economy that’s been anything but stable, and such an uncertain future adds myriad complications. Still, you want to take the utmost care when selling your home or when finding a new house to call your own. Here’s how to do it safely and smartly during these unprecedented times, while avoiding some common mistakes.

Think Far into the Future

When considering buying or selling, think of it as a long-term decision. It may be hard to think too far into the future right now given all the uncertainties, but it’s key to making a choice that you will be happy with a year from now and beyond, says Alison Bernstein, founder of Suburban Jungle Realty. You may want to ask yourself: Are we moving because we have to, we want to, or because we’re scared? What will the situation be like and how will we feel once this particular issue is fixed? See how your mentality might change in the long run, Bernstein recommends.

You may be inclined to look for a rental, but they’re hard to find in the suburbs and they’re often overpriced, Bernstein says. And with a rental, you’re uprooting your family twice. What’s more, you may rent in a town and fall in love with it, but then realize certain homes are zoned for different school districts within the area. 

You might also want to consider what the process itself is like for buying or selling a home right now. Jennifer Ross, founder and head community ambassador of From City To, a suburban discovery and relocation consulting business helping people explore and move to the suburbs of NYC, says that some of the state restrictions are making it very difficult for sellers to list their homes and for buyers to tour them. “Agents are currently restricted from interacting face-to-face with both parties, which hasn't stopped the process, it’s just jamming up the gears of efficiency,” she says. So prepare for some hiccups along the way. That said, you should absolutely be prepared to move quickly, should the opportunity arise. That means having your team and assets in place to execute quickly, including inspectors, lawyers, mortgage pre-approvals, and cash for down payment, Ross says.

Figure Out Your Finances 

Before browsing homes online or reaching out to a real estate agent, it’s a good idea to get your finances in order. You don’t want to fall in love with a house that you simply can’t afford. Greg McBride, the chief financial analyst for Bankrate, an online tool to compare financial rates, says the biggest mistake prospective homebuyers make is looking at properties before reviewing their finances. “That’s a recipe for trouble,” he says. “Instead, it pays to know how much you can afford and get pre-approved for a loan amount. That sets boundaries around your shopping.”

The first step is to request your credit score from each of the three major credit bureaus: Experian, Equifax, and TransUnion. An ideal score is one that’s higher than 700—it makes you attractive to lenders and could help you get a lower interest rate on a mortgage. Getting your scores early on helps you know where you stand, and also gives you the opportunity to dispute any errors on your credit reports before beginning the mortgage application process with a mortgage lender. “Credit standards have tightened so there is increased emphasis on income, credit score, and downpayment,” McBride adds.

Next, you’ll want to find and choose a mortgage lender. This can be a bank or a credit union, and it does not have to be one at which you have an account. McBride advises shopping around for a lender to find the best rate; you can compare prices in your area by using tools such as the Bankrate search engine. Once you pick a lender, be sure to request a pre-approval letter to show home sellers that you’re a serious buyer and will be approved for a loan. That said, some lenders currently won’t consider a down payment under 20%, McBride advises. Though low down payment options remain through the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA). In fact, you should probably submit applications with multiple lenders to see which one will give you the best price. “That can really give you an apples-to-apples comparison of who’s offering the best deal, both in terms of interest rate as well as the fees that are being charged,” McBride says. And FYI, current 30-year fixed rates are in the low to mid 3s for well qualified borrowers.

Perhaps most importantly, how much house can you afford? The rule of thumb is typically to pay no more than 30 percent of your gross monthly income on a mortgage, including property taxes, property insurance, and homeowner dues. “Don’t stretch it,” McBride advises. “Lenders may approve you for more, but at the end of the day it is the person in the mirror that is on the hook for the payments.” And when choosing the mortgage loan duration, most lenders recommend a 30-year loan to keep payments manageable while saving money for other things. “It’s better to keep your payments lower so you still have enough breathing room in your monthly budget to be able to save money for other purposes, such as emergencies, retirement, and your kids’ education,” McBride says. “You don’t want to be house-rich and cash-poor.”

The loan usually takes about 30-45 days to be approved, but everything may take longer to process considering work-from-home and social distancing requirements in place. You can expect lenders to verify employment once the application is submitted and again before closing. If your employer is slow to respond given current circumstances, or if you’ve had a change in income or work status, this could delay or derail your closing, McBride says.

Some of the boxes to check like title work, appraisal, employment verification, and online notarization could be slower right now because the usual routines are in flux, McBride says. In the meantime, you can prepare for such expenses, plus a home inspection and closing costs, in addition to principal and interest on the mortgage, property tax, property insurance, homeowners insurance, and utilities once you own the home and are paying the mortgage.

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Explore New Neighborhoods

Figuring out whether you want to raise your family in the city or the suburbs is a major life decision and shouldn’t be made hastily. What’s more, narrowing down neighborhoods to a select handful of your favorites is important before searching for a home because the area itself will play a huge role in your family’s life. Services like Suburban Jungle Realty and FromCityTo.com can help you do just that. “I have been specializing in helping city dwellers triangulate their unique community and home needs, wants, and wishes to hone in on towns that match their goals,” Ross of FromCityTo.com says. Researching neighborhoods is usually a combination of understanding your own personal lifestyle, researching online, speaking with locals, and touring the towns. “We’re your home counselor to empower our clients with knowledge to help them make the best decision possible,” Ross adds.

Drive through the neighborhood, on multiple occasions if possible, and take mental notes of what you observe. For example, is there a lot of traffic on the main road? What are the storefronts looking like? Is public transportation readily available? Are there a lot of parks and places to be outdoors? Are people walking around or are the streets empty? Is the area close to something desirable, like a shopping center or museum, or undesirable, like a wastewater plant or high-tension wires? 

“Our strategists make sure you’re looking in the right places, asking the right questions,” says Alison Bernstein of Suburban Jungle Realty. The strategists provide current information on each neighborhood and help homebuyers look at some of the important details like local daycares, live-in help options, nearby restaurants and amenities, and other hotspots and attractions. Perhaps even more importantly, Suburban Jungle will talk through the intangibles of living in a certain area. “It’s really about the neighborhood and the people, not the house,” Bernstein says. “It’s not about bedrooms and bathrooms. Your home is the community.” And all of this information sharing can take place virtually. Suburb strategists can set up video calls with clients to get to know them and conduct Facetime tours throughout the process, Bernstein adds.

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Choose a Home

Once you’ve targeted a few neighborhoods you’ll want to reach out to some realtors. Ask friends for recommendations or reach out to agencies and request phone interviews to get to know specific agents. When you find one you really like then you can dig into your want list and your wish list. These can include the house style, age, square footage, number of bedrooms and bathrooms, and other features like a yard, garage, basement, and so on. Ask the agent to send you listings and then browse the photos with a fine-tooth comb. Be honest about what you can and cannot live with in terms of a home. Then make in-person visits only to the houses you’re very seriously considering. And remember to wear a mask and wash your hands with soap and water before and after the visit. The process is much the same as it is during pre-pandemic times, just try to do as much of the legwork via email and phone as possible. And limit face-to-face contact as best as you can.

Prepare Your Own Home

If you’re selling your home try to look at it critically from the position of the potential buyer and then present a clean, well-kept home for photos and walk-throughs. “Many buyers are looking for move-in ready, so it behooves sellers to put in a little extra work, time, and money to get their home ready,” Ross says. Chat with your agent about touting some of the more appealing features of your home, including outdoor space, nearby attractions, local school ratings, and square footage. With work-from-home becoming the norm, many buyers are interested in space for a home office. Just don’t forget to call out proximity to public transportation as commuting may become important again with states starting to reopen.

When it comes down to buying or selling a home, the best advice is probably to prepare, prepare, and prepare, and then be flexible, Ross says. “Don't let perfect get in the way of really, really good!” And when you do find that really, really good neighborhood and that really, really good home, here’s how to make moving easier on the kids!

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