After the 2008 economic recession, I began to talk about the “new normal” and how the real estate business would continue on, just in a different way. Since the coronavirus has taken over the world, I’ve been hearing talk about the new normal again. This time however, I don’t think that phrase fits. We are reacting to this pandemic in an entirely different manner.
Pivot—To turn as if on a point
If you’ve read any of the articles I have ever written about real estate, you will know that I describe real estate market activity as cyclical. Regardless of outside economic factors, homebuyers and sellers act pretty much the same way every year. Business picks up in the spring, peaks in the summer and slows down in the fall. In previous times of economic change, for all practical purposes, the real estate industry would just “hang on” and ride out the storm and the new normal would eventually return back to the old normal. This time will be different.
What changes will happen in the real estate industry moving forward?
- Pivot #1: Private home showings. If everything else is forgotten, adults and children will all remember being constantly told to wash their hands, cough into their sleeves, wear a mask when out in public, and be careful to not touch things in order to not spread the coronavirus.
Real estate is the only business where a private homeowner invites the public into the sanctuary of their home in the trust of another person that they don’t know and allow them to go room to room and open closet doors, all while the homeowner is away from the house.
When a Realtor is showing a home to a potential buyer today, buyers and Realtors are most frequently wearing a mask, either bringing hand sanitizer along or it is available as you enter the home. When showing a home this past week, it was rather surreal to be walking around the home, all of us in masks, me carrying a sanitized hand wipe making sure that IF I had to open a door, I kept the barrier between my skin and the door knob separated.
- Pivot #2: Open House. Unlike individual showings of homes led by a professional Realtor, the concept of homes being open to the general public to simply walk in and look around, with no qualification of ability to purchase or representation is likely to be replaced with the Virtual Open House. Realtors will adapt to new technologies or be left behind in this industry faster than the days when email was first introduced or when we went from real estate listings in “the book” to the Internet.
I foresee a new Open House category in the MLS labeled “Virtual Open” where a potential home buyer can schedule a virtual walkthrough of a home led by the listing agent using technology that allows all parties to have access to the home all while being in the comfort and safety of their own residences or workplace. Technology already exists to allow this, and home sellers will demand that the early stages of home viewing be conducted virtually first. And THEN, after true interest, an in-home viewing will be allowed to happen.
- Pivot #3: Home Security. As a home buyer, along with their agent viewing a home for sale in person, you will not be alone. The homeowner will be listening and watch your every step. This is already happening, but the use of personal recording devices inside and outside of a seller’s home is skyrocketing. What used to be nanny cams and baby monitors is quickly becoming complete home video security systems that are triggered by motion or sound and every step recorded by a homeowner while a home buyer is led through their house. Every comment a buyer makes can and will be used “against you” in any offer negotiations.
Watch for disclosures of video and audio recording devices to be implemented into real estate contracts and displayed inside of homes for sale. At first voluntarily and I believe ultimately required either by MLS rules or possibly by local or state law. It is rare today that anyone looking at a home isn’t captured on camera either through a video doorbell system (which can hear audio at the end of a driveway by the way) or from a neighbor’s camera system.
- Pivot #4: Electronic Everything. Technology will drive the real estate transaction process completely moving forward. From video conferencing an initial buyer consultation to homeowner offer presentations. Photography of a home will no longer be just a panel of 25 high quality photos meant to pique the interest of a homebuyer into wanting to see the home in person, but 360 degree virtual walkthrough tours will be expected and full on video walkthroughs of homes by listing agents will become the norm, not the exception. There will be an increase in offers made first without a buyer physically being inside the home with contingencies of “subject to seeing the home in person upon acceptance”. If you think it won’t happen or that it isn’t happening… It already is.
There will be so many other changes that happen as a result of the world going through COVID-19 and while we all pray that there won’t be a COVID-20 or 21 down the road, this is certainly a time in our lives and in the real estate world that we will Pivot or cease to exist.
Next month I will be back with market statistics and how COVID-19 has affected the analytical side of the business. In the meantime, you can always find the latest in market activity and stats by going to SimplyDesMoinesStats.com.