Real Estate Round-Up Realtors and COVID-19
Last updated 4/9/2020 at 2:07am
On March 28, commercial and residential real estate was added to the list of essential businesses in California. For many homeowners and potential home buyers there was a joint sigh of relief.
For sellers, who had already listed their homes for sale, it meant they could continue to move forward with their goal. Selling a home is much more than just deciding one day to post a sign in your yard and hope for the best.
Sellers arrive at the decision either because a life situation is mandating that they sell their home, or as a result of months of evaluations of the pros and cons, followed by months of preparation, culminating in a final decision to sell.
Either way, it is seldom entered on a whim and requires physical and emotional bandwidth to sell your home.
Buyers on the other hand, have been struggling with low inventory for over a year. Many of the current buyers are people who finally, after the 2006 crash, are again able to purchase.
Interest rates are low and rents are exceedingly higher. Finding a home was a second job for many of these people, and then COVID-19 hit. Stopped in their tracks, feeling like the rug was pulled out from under them, they still would like to purchase a home.
So, what’s someone to do? Clearly, this is a personal decision. Realtors, like the clients we serve, are finding their way as we work together, during this uncertainty.
In the same manner as the public was becoming aware of the changing landscape of COVID-19, Realtors were responding as guidelines changed. To unify how Realtors can continue to work for their clients, the California Association of Realtors (CAR) has developed and disseminated four forms that Realtors are to use in their transactions.
The Coronavirus Property Entry Advisory and Declaration is an excellent document for both buyers and sellers. It recognizes the risks of exposure, acknowledges the “stay home orders” and provides clarity on real estate as an essential service.
Sellers should sign it, if they allow buyers to view their home. Buyers should sign it prior to viewing a home. By signing it, the party is acknowledging that they understand the potential risk exposure to COVID-19 when entering a home, and/or, that they do not have symptoms themselves or have knowledge of being in the presence of anyone with COVID-19 for the past 14 days.
The form also requires them to agree to social distancing and not touching items in the home. The parties are encouraged to wear gloves, booties and face masks and to wash their hands after viewing a home.
There is a Listing Agreement Coronavirus Addendum and Amendment that addresses potential showings of a listed property. The form explains the PEAD and provides additional restrictions on who can view the home, for example, requiring buyers to provide proof that they can financially purchase the home, and that they have previously viewed the home on-line.
The form also spells out what additional parties are permitted to view the home, for example, the photographer, the home inspector, the appraiser, the mover. Utilized as an amendment (something added to a contract, after it has been executed), the form provides the opportunity for sellers to change the status of their property from “active” to “on hold.”
“On Hold” will pause all marketing on the property and cease all showings of the property. It provides the listing termination date to be extended an equal amount of time that the temporary withdrawal is in effect.
If your home is listed for sale, you should discuss how you want to handle the marketing and viewings of your home with your Realtor and incorporate the RLL-CAA into your listing agreement, if appropriate.
Simply not allowing showings is a breach of the original contract. This form allows for modification and extension of time, for the mutual benefit of the seller and Realtor.
The Coronavirus Addendum is a form that accompanies a Residential Purchase Agreement and incorporates pre-approved extensions of time to the contract, if the buyers are unexpectedly impacted by COVID-19.
For example, if lenders get backed-up because of smaller staff processing loans, or appraisers or home inspectors find their timelines delayed, an extension of time up to a maximum number of days has already been spelled out and agreed to. If the close of escrow is delayed due to COVID-19 impacts, the extension of time has already been spelled out and agreed to.
The buyer can also provide this form to the seller as an amendment to a previously fully executed purchase agreement, if they have been impacted or expect to be impacted by COVID-19.
However, like any amendment, all parties need to agree to the revised terms or the original contract remains as the binding agreement. If the form is incorporated into the purchase agreement, and the buyer chooses to activate the extensions, a Notice of Unforeseen Coronavirus Circumstances must be provided.
The form provides “reasons” for the needed extension of time, like “loss of income,” lender delays, scheduling delays or actual diagnosis of COVID-19.
Like you, Realtors are finding our way, one day at a time. It seems like every week, by the time this article goes to print, much has changed as it relates to how we handle this unusual environment.
I’m proud that the California Association of Realtors is providing a path to help Realtors service sellers throughout the process of selling, and help buyers attain their long-awaited dream of home ownership.
If you have questions about these forms or any other aspect of real estate during these unprecedented times, I’m happy to help. Until then, stay healthy my friends.
Kim Murphy can be reached at [email protected] or (760) 415-9292 or at 130 N Main Avenue, in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.