3 Ways Buyers Can Protect Themselves When Buying During the Coronavirus Pandemic
3 Ways That Buyers Can Protect Themselves When Buying During the Coronvavirus Pandemic
Okay, so there’s no doubt by now that the COVID-19 coronavirus has impacted our communities all around the globe, physically, mentally and financially. It’s been tough, no doubt, but I’m committed to always focusing on positivity and solutions that help us move forward.
I’m a realtor here in San Diego County, and in this blog post, I am going to share 3 ways that buyers can protect themselves when buying a home right now – so let’s jump in.
I want to start by saying it’s totally, 100% understandable that with uncertain times, someone who had been planning to purchase a home would take pause. Please know that this video isn’t designed to convince you that you should buy a home right now – that’s up for you to decide for yourself. This video is for buyers who need to purchase a home in a time with so many uncertainties like this.
If you are wanting to buy a home right now, you’re probably asking yourself questions like 1) how do I see homes when social distancing is a top priority? 2) What happens if I lose my job during escrow? 3) How can I protect my earnest money deposit in case there are delays to closing escrow based on shutdowns related to the coronavirus? By the end of this video, my goal will be to provide insight into some of these questions.
#1 The first point I’m going to touch on is about protecting yourself physically. Instead of being out and about during this time when we’re being asked to stay in and distance ourselves, you may really want to consider taking advantage of technology. To start, ask your agent if there are resources like a video walk-through or Matterport walk-through which uses a special 360 camera to provide an explorable layout of the home.
Of course nothing beats being there in person, although there are also services like FaceTime, Facebook video, or Zoom allow video call capabilities connecting two or more people with an agent to easily respond in real time to requests to see features of the home that may not be apparent from the listing photos – and the best part is that these services are free. This will allow you to tour the listings that you’re most interested in from the comfort of your own home. This is how I’ve helped buyers house hunting from another part of the country, and it would work well in this situation, too.
Now the question may be if the seller is allowing showings or if your realtor is able to get to the home to do the video tour with you, but at least now you know that we have options for viewing listings without leaving your home.
#2 Okay, the next way that a buyer can protect themselves when purchasing a home right now relates to the concern about protecting your earnest money deposit if you lost your job during escrow or if the lender can’t fund the loan due to changes in the funds available to lend.
The great thing is that this one is simple and it’s all about having your loan contingency work for you. The best way that I can describe a contingency is having the contractual right to cancel escrow and still get your earnest money deposit back. So… When writing up your offer you could make your loan contingency span the entire length of the escrow or even add wording that clarifies that the loan contingency will be in effect until the loan is funded.
#3 The final option that I’m going to share today is literally hot off the presses this week. The California Association of Realtors created a new Coronavirus addendum form that addresses the possibility of escrows being impacted by issues related to the Coronavirus. This addendum could be sent along with your offer to add some extra protection in light of the many ways that we’re seeing our communities impacted by this pandemic.
The first paragraph states that the buyer and seller would agree to extend escrow by up to 30 days (or another date could be filled in, if desired) if either buyer or seller are unable to perform to close escrow due to “Unforeseen Circumstances” related to COVID-19. The addendum defines “Unforeseen Circumstances” and provides examples of situations like a title company, escrow company, mortgage company, governmental entity, county recorder, or any number of other third parties that are unable to do what needs to be done to get the escrow closed on time.
While a buyer and seller do not have to agree to use the CAR Coronavirus Addendum, it seems that it may very well make sense for a buyer and seller to agree up front to give time to work together to see if the problem can be resolved and escrow can then close. If the escrow cannot close during this extension, then either the buyer or seller would be able to cancel the escrow.
This clause could actually benefit either the buyer OR the seller. If the seller is unable to perform for reasons related to the Coronavirus, then the seller should not be in a position to have the buyer pursue legal action against the seller or the property.
Keep in mind that the language in the Coronavirus Addendum was not designed so that a buyer or seller can cancel just because it may be more difficult to close the escrow or just because market conditions have changed. The intention of the form is to allow for cancellation IF the buyer or seller is unable to close escrow due to issues related directly to the coronavirus.
The next two paragraphs in the Addendum if checked, allows the buyer the right to have their deposit returned if the buyer is unable to fund their loan due to loss of income from COVID-19 related issues. And this is even if the buyer has already removed the loan contingency. Once again, whether this box is checked or not is negotiable between a buyer and seller.
Before wrapping up, it should go without saying that as a Realtor, I cannot and will not be able to give legal advice to buyers or sellers. If you have any questions about what I’ve shared, I would encourage you to speak with your own legal counsel.
Okay, well there you have it. Buyers can protect themselves by utilizing technology for virtual home tours, try extending their loan contingency throughout escrow and try using the new California Association of Realtors Coronavirus addendum to protect their earnest money deposit if they are forced to cancel escrow due to issues related directly to the coronavirus.
As always, this info is for people everywhere, but if you’re looking to make a move to the San Diego County area, I’d be happy to be a resource.
Stay smart and stay safe out there - and now more than ever, I hope you love where you live!