What is the impact of the Coronavirus (COVID-19) on real estate matters in family law cases? How will your clients be affected, both directly and indirectly? Here are some things to consider from the real estate perspective:
Buyers have greater buying power than ever before as interest rates are being held at record low levels, making it easier to sell a marital property. (It is important to note that the Fed lowering the national rate to 0% is not the same as mortgage rates dropping to 0%). This also means that it might be easier for a spouse to get qualified for a refinancing that allows them to buy out their ex. If the properties are being sold, this stimulus is definitely helping to offset the consumer confidence response to purchasing real estate.
However, a buyer who is temporarily suspended from work has no buying power. Any confidence from the declining interest rates can quickly turn to fear if a loan’s approval is thrown into question.
What This Means to Your Clients: If a spouse was considering a buy-out, now might be a good time for him/her to speak with a Certified Lending Professional to see if they qualify.
Showings and open houses are affected:
Our industry has been advised not to hold open houses, due to the anti-congregation rules. We also have sellers who are concerned about buyer traffic. However, there are work-around opportunities to still show the home.
What This Means to Your Clients: There will likely be a new open house protocol. In my office, we are vetting buyers more thoroughly, requiring them to supply proof of loan approval before showings, and offering virtual tours and FaceTime showings, in lieu of holding open houses. Providing booties and wipes, as well as keeping doors open in the house to cut down on touching doorknobs are also some good practices.
Closings may be delayed:
At a basic operational level, closings may be affected. In response to the State and National Declarations of Emergency, county offices are making arrangements for social distancing. We have been advised that these new protocols may result in delays in real estate closings.
What This Means to Your Clients: It may take longer for your clients (and possibly you!) to receive proceeds from the sale of the house. Prepare your clients for this possibility so they know what to expect.
Consumer confidence impacts real estate:
We are still waiting to see what the full shakeout will be for consumer confidence. Will people be worried about their jobs, and thus not want to make a big move? Or will the opportunity to lock in a great deal compel action, making your client’s home an attractive deal for buyers?
If there is a shift in the market, attorneys and their clients need to act on the sale or equity buyout as soon as possible. Compensation for both attorneys and real estate agents is often tied to the sale of the house. As a Certified Divorce Real Estate Expert, I have experienced market shifts before, and I am trained to walk you through this.
What This Means to Your Clients: Explain to your clients that this is an unprecedented time and to not panic. I am happy to discuss the pros and cons of listing their property for sale now versus waiting a bit.
Property values may fluctuate:
We do not yet know what this will do to property values. Typically, when interest rates are so low, affordability expands and prices increase. However, these are uncharted times for us with consumer confidence being shaky and a global economic crisis happening.
What This Means to Your Clients: Their valuations should be updated. The values should be as close to the date of division as possible since the turbulence can cause fluctuations week by week. I am happy to run comps and give you a valuation report.
The full story of COVID-19’s impact is still being written. I’m available to talk through any real estate questions you might have as we all work together to move through these uncertain times. “The house” in divorce typically provides funds for many other things in a case, and in the couples’ lives. It can also be a source of tension, adding to the already stressful situation. I am committed to ensuring you are updated during this time while keeping you on the pulse of the market!