Starting this month I will be putting a page together showing what is happening in Pike Real Estate. It will always be for the month before. It will show highlights of sales prices, history, and an overall picture of the Pike market. The page can be found here
The New Normal
Back in March, I had started reading trade articles about how title companies were going to do closings. Normally, the closer, buyers, and sellers and their Realtors would all be in one room and sign all the documents. For social distancing reasons, title companies started offering options. You could still all close in one room, you could have buyers in one room and sellers in another or you could have a curbside closing. A curbside closing? This was new.
Never Get Out Of Your Car
I got to experience it this last week. Once you arrive at the title company, you stay in your car and call to tell them you are there. Once all parties are there, they bring all the documents to the buyer and seller for them to sign. Once signed they go get copies made and return with packets of documents for the buyer, seller, and their Realtors.
It seems that convenience, health, and safety are the new normal. It may be but I see virtual closings online coming soon. I read this morning “In a survey conducted by Solidifi, 81% of consumers reported they would still do a mortgage closing in-person versus digitally, but 70% of consumers also said they would like a more digital process when closing”. Mixed signals. It will be interesting to see those numbers a year from now.
I suppose this could not have happened at a more appropriate time. The building in which I had my office suite had a fire on Nov. 30th, 2019. Although the fire was only in one suite on the second floor the smoke and water damage in the building was EXTREME. All 22 tenants in the building had to vacate the building while it was going to be rehabbed. The estimated return date is Nov. 30th, 2020.
I decided that I would not find another office space and work out of my home. I had done this before between 2014 and 2016, my last three years with a major brokerage before becoming independent and starting my own brokerage. Without a lease, this lowered my cost of doing business.
I had started meeting with my agents once a week at a Starbucks. This worked well until the coronavirus changed everything. Fortunately, on March 23rd real estate services were considered an essential business on the governor’s executive order. It also required social distancing. WAIT, WHAT? Real estate is a relationship type of business. It requires meeting belly to belly with people and talking about their real estate concerns and challenges. How would this be possible? My Starbucks closed, so I could not meet with my agents.
I was planning to take a trip to California to visit my son, his wife, and my turning 3-year-old granddaughter in March. That got canceled. My son suggested that we do a video call on an app called Duo. That happened and I was quite impressed. I got to see my granddaughter, talk to her, and see what new toys she was interested in. I believe communications are enhanced when you can see someone’s face and body language. I thought this might work for real estate. I started having Zoom calls with one of my agents. It was very productive. I could show her computer screens, programs, marketing materials and show her how to do certain things on the computer. But, would this work for customers?
Normally when I list a house I must see it, and not just the outside. I need to tour the house. A good Realtor can tell a lot by just walking through a house. The last time I listed a house and was not able to go inside, I got burned. The assumption is that it is a normal/average house. I priced it as such. Once I got inside, I could not believe what I saw. The owner had a meth habit. Windows had been boarded up from the inside among other things. The house had not been taken care of. I had priced it two times higher than what it should have been. I will never list a house again without touring it.
On April 20th, 2020 the governor updated his executive order. It states that real estate services should be conducted virtually or by telephone whenever reasonably possible, and any professional services requiring face-to-face encounters should be postponed unless the failure to meet in-person will have a significant adverse impact on the client’s financial or legal position. WAIT! Isn’t that what real estate is all about? A client’s financial and/or legal position?
So how was this coronavirus thing going to affect the real estate business? I started reading trade reports and Facebook trade groups on how other Realtors across the nation were doing business. It seems that 1 in 4 buyers will buy a house without touring it. WOW! I read that sellers were not willing to list their houses during the pandemic because they were afraid that buyers would tour their houses and steal their toilet paper and hand sanitizer. Open houses were being done virtually either by buyers watching a video or listing agent showing the house on Zoom and touring the house and talking with the buyers and their agent at the same time. I learned many years ago that you do what the seller wants you to do as long it is legal and ethical. I was ready for the challenge.
In 2007, a Zionsville investor found me on the internet. Over the past 13 years, I have bought and sold 8 homes for him. He called me in March and wanted me to sell one of his rentals in Pike. He wanted to know what it was worth. He was going to rehab it and it would be ready to list by the end of April. Knowing how he rehabbed a house, he was every Realtor’s dream. I came up with a home value for him. It was not set in stone and I would have to see the house after rehab for a final value.
On April 29 I got to see the final product. I was impressed. A very nice 3 bedroom two story with new carpet and paint. It had a very traditional floorplan. I listed it that day. I asked him how he wanted showings to be arranged. Indiana Association of Realtors had just come out with new documents for listings and showings during the pandemic. Basically they were disclosures on how the seller wanted showings and a document that all buyers had to sign in order to tour the house. It asked that buyers take “reasonable precautions” and if someone in the visiting party is diagnosed with a confirmed case of COVID-19, or if a visiting party or any person visiting the property with visiting party has had direct contact within the past 14 days with an individual with a confirmed case of COVID-19, the undersigned agrees to immediately inform Broker.
I am not an attorney! Healthline.com says that 25 to 50 percent of people with COVID-19 are unaware they have the virus. They also said that people with no symptoms are the source of 44 percent of diagnosed COVID-19 cases. It seems to me that we are probably in direct contact with people who have COVID-19 and are not even aware of it. Would these documents help? Would a visiting party touring the house even know that they have COVID-19? It seems to me the only solution to the virus is to be quarantined to your own residence for 3 or 4 weeks and not be in direct contact with anyone.
Back to real estate…after going through the documents with my seller, he said “I want to make showings as easy as possible. They don’t need to sign the disclosure.” Fine. In the next 8 days, I had 23 showings and 5 offers. Again, a Realtor’s dream. An offer was accepted and we close in June.
Not only are Realtors changing the way they do business, but title companies also jumped in as well. I see some title companies are doing closings where the buyer and seller are in separate rooms. I also read where one title company will do an “at the curb car closing”. You never have to leave your car. Remote closings, where you close in a different city or state with a notary have become common. Notaries are a must at all closings. You have to prove to them who you are and they notarize all signed documents. Originally, virtual notarization was to become legal in Indiana as of July 1st. That means that you could close on a home over the internet. Because of the pandemic, the governor moved it up. The title companies are working as fast as they can to make this happen. Now that is what I call social distancing.
I did absolutely no marketing for the house. This just goes to show you that we still have a strong market during the pandemic. With only 60 houses in Pike on the market, it is definitely a seller’s market. A balanced market in Pike would be about 500 homes for sale.
It will be interesting to see how real estate and this pandemic play out.
After you get a mortgage loan, there are certain things that the mortgage lender expects from you.
1. The debt to be paid
2. Property taxes to be paid
3. Home insurance to be paid
4. They want you to maintain the property so that the collateral will be enough to pay off the debt.
What most borrows don’t understand or know is that they can’t make significant improvements to the home without lender approval. So, if you want to make a room addition, add a swimming pool or finish a basement, under most loan documents you have to get written authorization from the lender to do so. Otherwise, you are in breach of your mortgage loan documents.
What could they do if you have not gotten written authorization and they catch you? They could accelerate your mortgage loan and make you pay it all off all at once.
I went out of town Thanksgiving week to visit relatives. Late on Saturday night, December 1st I received a text from Susan Blair, President of Pike Township Residents Association, saying she had passed by my office building last night and it was on fire. I texted the owner of the building, Dan Baldini, to confirm. He responded that it was true and see the email that he sent out. I had not gotten to my emails yet but when I did this is what I saw;
I asked one of my agents to take a picture of the front of the building and send to mee. This is what he sent;
My first thought was “OK, I am good. My office is on the first floor in the rear west side of the building.”
I returned home that evening to a postcard that said I had jury duty. Wonderful! I also had a new email from Dan;
Tuesday morning December 2nd, I decided to go see what my office space looked like. When I parked my car in the parking lot, I was approached by a man from the rehab company. He explained to me that I had to be out of the building by Friday. That meant moving everything that could be salvaged into a rented storage locker down the street.
When I entered the building there was no electricity. It was dark and the smell of smoke was almost unbearable. All the tenant’s office suite front door had been pried open by the fire department. The second floor, where the fire started, was blocked off for investigation reasons. As I walked down the long hallway past the lobby area, the floor was covered with water.
I walked into my office suite. The only damage I found was smoke damage and it was intense.
I spent three days packing what could be salvageable and left the rest for the rehab company to decide it’s future. Seventeen fabric chairs most likely will be tossed. You can’t get the smoke smell out of them. The desks will be assessed for smoke smell along with the computers and printers.
All twenty-two tenants have to vacate the building from anywhere from 6 to 12 months while the building will be gutted and rehabbed.
You really don’t realize the damage smoke can cause until you experience it. I took 6 boxes of personal belongings back to my house and now my house smells of smoke.
I decided to work out of my house for the next 6 to 12 months. My business has to continue. I will survive.
Predicting what it will cost to buy a house is very important for home buyers. The two biggest concerns home buyers have is what are the monthly payments and what is the down payment. Down payments can be tricky. Depending on your credit, any programs that you may qualify for, and down payment assistant programs, your best bet is to talk to a loan officer. (I have a list of loan officers that have been involved in my transactions and that I trust. Just ask me to send it to you.) As to the monthly payments, that can be estimated by a Realtor using calculator apps. My favorite one is Karl’s Mortgage Calculator.
By knowing the price of the house, property taxes, insurance costs, and the mortgage interest rate, you can estimate what your payments will be.
Some of the other nice features of the calculator are showing a table of what the balance of the loan will be every year.
It will also allow you to add-in homeowners association costs, show you what you will owe with principal prepayments and will show you what you can afford to buy with a given monthly payment.
As a Realtor, I find this tool to be very helpful for working with home buyers. It can be found on Google Play and Apple’s app store.