Buying in 2021: What to Know About Going DigitalPosted on Jan 19, 2021
It’s no surprise that the last year and a global pandemic has affected our lives – from how we work to how we socialize and travel, to how we buy and sell real estate- everything is going digital. Due to the health protocols laid out by the Center for Disease Control and Prevention (CDC), buying or selling a home in 2021 will more than likely be anything but business as usual. Here are some vital tips to consider for buying in the digital age:
1. Forget the spring homebuying season
In a normal year, a significant share of buyers would base their home purchasing decisions around the start of the school year. But Coronavirus lockdowns and restrictions on home tours threw the market a curveball last spring, usually the busiest time of year for sales. We experienced a shifted seasonal pattern; summer became spring, and demand for housing continued well into the fall. In fact, in October, existing home sales grew to a seasonally-adjusted annual rate of 6.85 million — the highest pace since 2006.
Low mortgage rates and the rise of remote work have been driving home-purchase decisions. Remote work has encouraged people to seek solutions for their quarantine-induced space problems. All of a sudden, homes are no longer big enough, driving buyer demand.
2. Begin your search online
The way buyers shop for homes has evolved rapidly since the beginning of the pandemic. Virtual tools, such as 3D home tours, help provide a better sense of property flow than mere photos.
Sellers have needed to adapt much more actively towards using video tools, including 3D imagery, to market the homes. While specific data isn’t yet available to confirm this, anecdotal stories suggest that online home shopping has reduced the number of homes that buyers visit.
3. Prepare for bidding wars by getting pre-approved for a mortgage
According to NAR, there were 1.42 million existing homes on the market at the end of October. At the current pace of sales that only translates to a 2.5 month supply — a record low.
In competitive markets, like Denver, having financing lined up and prepared for a bidding war is in your best interest. It’s common for multiple offers to come in for a home, including from investors in the entry to mid-level price segment paying for properties with cash, but don't sweat it, because Team Lassen’s expert negotiators have your back!
When comparing offers, sellers will not only look at the price being offered, but they’ll also examine whether one buyer has an easier path toward closing than their other offers. If you’re already pre-approved for your offer price, that can give you a leg up against the competition.
4. Prepare for the underwriting process
More mortgage providers have been offering borrowers the ability to complete and e-sign their application package online, deliver disclosures electronically, and allowing for remote notarization. What was once a paper-heavy and often cumbersome process is starting to be streamlined, significantly reducing time, effort, and physical contact.
Lenders have adapted to seller reluctance unnecessary entering of their homes by allowing appraisal waivers. This gives qualified loan applicants the option to forgo the traditional method of appraising a home. In some cases, more sophisticated virtual tour solutions guide homeowners through the photo-taking process, filtering photo submissions to ensure they are current and specific to the property being appraised, and automatically funneling pictures and data into an appraisal report.
Questions about the paperwork involved in the buying process these days? Our in-house lending team is always happy to help!
6. Hurry up and wait
According to mortgage technology provider Ellie Mae, the average time to close a loan this past October was 54 days. That’s ten days longer than in 2019. Lenders have been swamped with processing loan applications due to historically low mortgage interest rates and high demand.
Several other issues could delay the mortgage closing process, causing the underwriter to reject the loan, including a change in your credit score or job status if the appraisal comes in lower than the agreed price, the home inspection reveals serious issues, or there are problems with the title.
But if you make it through the hurdles, closing should be much quicker than in the past. Instead of a traditional in-person closing where you had to take off work to drive to a title company to sign the mortgage and other documents, many states are passing remote notarization acts, allowing title companies and agents to close without the need to be in the same physical space.
In summary, 2021 is likely to continue to be a seller’s market on the national level, and social-distancing guidelines make things more challenging (but also easier in some ways?) for both sides of a real estate transaction. If you need help navigating a home purchase this year, don’t hesitate to reach out!