Realty Executives of Sudbury Ltd.

The Caswell Team

The Caswell Team

Buying During COVID19 Crisis

Buying During COVID-19

 

As you've heard by numerous people, these are unprecedented times.  Almost unbelievable, really.  In response to this, we have created two new pages on our site dedicated to explaining Buying and Selling during these unique and challenging times.  This page explores the Buying side of the process and you can jump over to the Selling side of the process here.

We continue to encourage those that do not have an urgent need to buy a property to hang tight.  But we're cognizant of the fact that the market will always be in motion and are here to help at anytime.

We have broken this page down into various parts outlining significant changes to the process, how we will ensure you're protected throughout your purchase from start to finish and have included a section specific to general buying groups. 

Be advised this a generalized discussion, but every situation, including yours, is unique and the entire process will be customized to suit your specific situation.  Further, as the situation remains fluid, we will continue to update these COVID-19 pages as changes occur.

 

Changes to the Process

 

The buying process is currently undergoing a major transformation across the entire spectrum.  We've broken down the process into the most common stages below with issues that have arisen, adjustments that have been made and the ongoing solutions that have been evolving.

 

Viewing Properties

 

Getting out to tour properties is one of the biggest challenges buyers will face as it is usually the next step in the process after finding suitable properties on MLS™.  But viewings have become very strict, tenanted properties are almost impossible to access and there are even listings coming online that are only available to view after you've already submitted an offer that gets accepted by the seller.

For properties that are available for viewing, most sellers are requesting the buyers and their Realtor® answer a somewhat standardized health questionnaire and submit it prior to viewing.  Once at the property, requests for limitations to the number of people are popping up, and we agree with this.  In most cases, they are limiting the group to three, including the Realtor®.

All properties allowing viewings are leaving all lights on and doors open to limit touching of surfaces in the property.  Sellers are often leaving out hand sanitizer and/or wipes for buyers to use upon entering the property.  Buyers are also no longer allowed to use washrooms when viewing the property.

 

Properties Not Available For Viewing

 

Listings are starting to pop up that do not allow any in-person viewings of the property until after there is an accepted offer in place.  We've discussed how we believe this is a terrible play by sellers on our Selling During COVID-19 page.

For these properties, they usually have provided quality photos and/or virtual tours.  Most buyers are used to this as a starting point in their search, but now they're being requested to use these methods as the basis as to whether or not to buy the property.  Yet, as we all know, a seller is not going to include pictures of the basement seepage, sloping floors due to foundation issues may not be visible on a virtual tour and it's nearly impossible to know whether your king size bedroom set will fit in the master bedroom without knowing where the heat registers, doors and windows are located.  Or if it will even fit up the stairs!

So, basically the seller is asking you to take their word on it, send them an offer and then you can come have a look.  In most circumstances, this will be a waste of their time and yours, going through the offer process only to eventually visit the property and find out the layout doesn't work for you or the overall condition of the property was not as advertised.

That being said, in some cases it can work and we have created warranty clauses and conditions to protect you for these situations and are currently working on a complete disclosure document regarding any imperfections the seller is aware of to include as a binding part of the offer.

 

Submitting an Offer

 

All offers will be completed electronically using electronic signatures.  This was becoming more common throughout the industry prior to this, but the option for in-person "pen to paper" is completely off the table during these times.

Offers will be solely created to your unique situation depending on your individual circumstances regardless of whether or not you've been able to view the property in-person.  As noted above, we have a full arsenal of standardized and customized clauses that will ensure you're protected for your purchase.

It is very important to remember that Agreements of Purchase and Sale are legally binding contracts and you will be bound to the terms and conditions within the document and you will be required to fulfill your  obligations within it.

 

Deposits

 

As a condition of all offers, the buyer is required to submit a deposit to be held in trust by the listing brokerage.  There is no change to fact that these deposits are fully refundable back to you if you do not remove your conditions and proceed with the purchase.

However, cheques and cash are no longer being accepted as forms of payment for deposits.  Only electronic fund transfers are currently being accepted.  This has to be addressed when writing the offer to ensure you personally have the ability to complete an electronic transfer and ensure we are using the appropriate timeline for you to complete it.

 

Financing

 

Interest rates are at all time lows and looking very appealing.  But, as mentioned above, you are entering into a legally binding situation.  Are you confident that your employment status or financial status won't change prior to closing that may cause your financing to pull out?

At the time of this writing, we are hearing how financing is becoming tricky.  Banks are showing concerns for the reasons above.  It is imperative that we work with your lender from start to finish to make sure they're committed and ensure no surprises pop up from the moment we satisfy this condition right through to completion of the purchase.

Regardless, if you are considering buying in the next 30-120 days, we encourage you to reach out to your lender or contact us so we can put you in touch with the top lenders in Sudbury to get pre-approved and secure your rate for the standard 90-120 days.

 

Home Inspections

 

We have always encouraged buyers to attend their home inspection.  It is usually a great opportunity to spend a couple of hours in the house to really get a feel for it and have the opportunity to ask the inspector questions in-person.

Unfortunately, the option to attend inspections has been eliminated by the inspectors themselves and we support this decision.  The inspectors that are still operating during this period are requesting that no one is in attendance - buyers, sellers or their agents. 

As always, they will still complete the usual thorough inspection, provide the report electronically and are now scheduling a time to go over the report with you over the phone to answer any questions or discuss any concerns you have.

Not being able to attend the inspection shouldn't be a deal breaker and we feel the inspectors are handling this part of the process as best they can.

 

Other Inspections

 

It isn't uncommon to have the need for additional inspections on various properties.  For instance, Multi-Family purchases may require inspections from Electrical Safety Authority (ESA) and/or the city's Fire Prevention Department.  Purchasing a property supplied by well water will require a water sample taken and submitted to the Health Unit.  Purchasing a commercial property would likely require an evironmental assessment and ESA inspection.

As you can see, most of these inspections and property visits are required by third parties to complete.  During this time, it is difficult to know how their industry will adapt their working models in response to the changing landscape of COVID-19, so it's imperative to ensure you're well protected in the Agreement of Purchase and Sale in order to complete these as needed without being bound to a contract where you can't fulfill your obligations due to a third party's changes in their delivery of services.

 

Appraisals

 

Appraisers seem to be operating at near normal levels.  They do have the ability to appraise remotely for some properties where the value will fall inline with the surrounding properties.  For instance, buying on a cul-de-sac where the homes are all similar and there have been a few sales in the neighbourhood that would confirm the value.

Unique properties, however, will likely require an on-site visit.  These include custom homes, rural properties, cottage properties and commercial/industrial properties.  It is important that we are in direct contact with the lender during this process, and prior to writing your offer, so we know timelines that would be required to satisfy any appraisals.

 

Removal of Conditions

 

It is important to remind you that, upon removal of conditions, you are legally bound to fulfill your obligations under the contract to complete the sale regardless of any changes to your personal circumstances.

We have to make sure, with 100% certainty, that you are prepared to close on your purchase and you are comfortable with removing conditions before we take this step.

 

Closing Process

 

The closing process has undergone significant changes and new State of Emergency clauses have been designed to ensure closing occurs.

You will no longer sign in-person with your lawyer.  All signings for closing documents are being done virtually with the lawyer visually identifying you through an online video platform and witnessing you electronically sign the documents while on the video call with them.  You must have the capabilities to complete these video calls and electronic signatures.

The State of Emergency clauses include statements that you are allowing lawyers to close the deal electronically, as noted above, and that you agree to an extension of closing if any issues arise from financial institutions or title registration delays that may occur as the situation evolves.  You will still be bound to close, but closing may occur much later than what was originally agreed upon between yourself and the seller.  This circumstance may create a difficult situation if you've already committed to closing your sale, served your landlord notice or, in the case of commercial, made business commitments for operations to begin or resume and cause implications against any outside financing, investors or partners.

 

In a Nut Shell

 

If you've bought property before, you can see that the current situation is quite different from what you're used to.  If this is your first buying experience, it has become much more complex than what it was only a month ago, so it's important you know the process and have us guide you through it properly.

How long will these changes last?  Who knows.  Hopefully not long for obvious reasons outside of real estate, but some of these changes may actually become the new normal moving forward.

Repeating what we opened with, if you are not currently in duress with your housing situation, we are encouraging you to take your time and ease into buying. 

As the situation is changing day-to-day, it's hard to predict what outside influences could be created that could better your buying situation or damage your ability to close.  We believe that there may be huge incentives on the horizon to help get the market and economy moving on the backside of the health crisis portion that you may miss taking advantage of buying while the focus is on health and not on the economy.  On the other side, the essential services roster is continuing to change and your employment status could change overnight severely impacting your ability to get financing for a contract you're legally bound to.

 

Different Buyer Ideas & Concepts

 

Before we get right into the different buyer categories, we want to make sure you understand we are not judgemental.  We know there are people who won't be impacted financially by COVID-19, we know there will be some who will see heavy damage to their financial situation and there will be others who will look at this as an opportunity to upgrade and invest.  It's our duty to help you no matter what your considerations are and deal with your unique circumstances.

It's important to note that someone who may be looked at as "taking advantage of others" could also be looked as the person who bought the property that helped to get a family out of financial duress.  We want both sides to come out of this with the best possible scenario for them.

Regardless, all movement in the real estate market helps everyone.  There are so many moving parts to a real estate purchase that creates movement of money within our community that, in turn, is money these service providers spend in the community and it all helps to stimulate the economic engine.

We don't judge, we help.  And it's our responsibility to keep all clients informed as to their circumstances.

 

First Time Home Buyers

 

As noted above, this is a very complex time for you to enter into home ownership.  We're here to help no matter when you decide the time is right.

There are currently some solid financial incentives offered to First Time Homebuyers.  Some include Land Transfer Tax rebates, ability to borrow from your RSP and even the option of 5-10% contributed by the federal government towards your purchase (but be very careful of this one).  And interest rates are at all time lows which could look very enticing.

However, what we don't know at this time are what some future incentives could be available for you that may pop up after the health crisis portion of this is corraled and governments look to generate economic activity.  Further, it's likely that interest rates will remain at extremely low levels for the foreseeable future.

If you want to buy now, we're willing.  But we encourage you to reach out to us and we'll take our time getting our ducks in a row while watching for potential new incentives and be ready to act when the time is right.

 

Downsizing Buyers

 

Whether you were already consideirng downsizing into something more affordable and manageable or the current circumstances have caused you to reflect on your financial situation, we can get it done.  Regardless what your reasoning is, you should still try to sit tight if you can and reach out to us so we can go through the process of doing all the important prep work now. 

If your financial position is causing more immediate action be taken, as we've mentioned in our newsletters, you should first explore the options of mortgage deferrals or possibly refinancing at the current low interest rates to see if we can reduce your current monthly payments for the interim. 

If you are in the downsizing category, you will have a property to sell and you should review our Selling During COVID-19 page for important information as well.  As you've read above, buying or selling has become much more complex than when you bought your property, which means having to buy AND sell requires even more attention to detail to make it a smooth transition.  Let's get started now.

 

Upsizing Buyers

 

We are predicting that there will be great opportunities upcoming to upgrade your home.  Maybe you were already feeling squeezed in during the family Christmas dinners or you've just started thinking that the current situation may create an opportunity for you to upgrade to an even better home than you thought you could have.  You could be in a very good position moving forward.

It's our belief that there will be a considerable amount of higher end properties that come to market due to financial struggles that are happening out there.  And you may be currently in a home that will be in a very high-demand buying bracket.

Like others, we'd recommend you consider sitting in place while we wait to see what changes may occur over the next few weeks.  In the interim, be sure to check out our Selling During COVID-19 page and make sure we get in contact right away to get the process started and be ready to act when the timing is right.

 

Multi-Family - Personal Use or Investor

 

It doesn't matter if you're looking at buying a duplex to move into with your parents in the other unit or you're a seasoned investor that understands what OCF, CFBT and GIM are, these are extremely challenging times to purchase rental properties.

As we've mentioned above, tenants are declining showings of units and we're confident the NOIs we see on listings showing 2019 numbers are likely to be drastically different in the next few months.

Currently, there is no Landlord Tenant Board hearings which means you cannot evict tenants and you cannot enforce rent increases or any other notices you serve as a landlord (ie. tenant to leave for new buyer's personal use).  Because of this, committing to these properties as a buyer requiring it for personal use can be very dangerous at the time of this writing and we strongly encourage you to wait until usual systems for landlord-tenant regulations are back in operation.

If you're an investor and rely primarily on the numbers, let us help with a couple of Brokerage Adjusted Property Analyses showing some different ranges that could occur from the impact of COVID-19 and regulations being on hold.

We can get it done no matter what.  But now is the time for even more dilligence with the purchase of these properties, regardless of the reason, and make sure you're protected all the way through.  We're ready to start the heavy lifting to make it happen when you think the time is right.

 

Buying New Construction

 

We have recently seen a few local builders who have actually reduced their list prices.  This is very uncommon and was also before the announcement that ONLY builds that already had a footing permit could continue construction.  With new permits being unavailable at this time, that doesn't mean you can't start the process of building.

 

We work with Carniello Contracting - a high quality builder.  They already have footing permits in hand and can work with customization on your new home with you.  They also have a couple styles of homes coming to a finish now that will be move-in ready for you.  But if they don't have exactly what you're looking for, we also work with all the other builders in town.

 

Or maybe it's a good time to start looking for the lot.  We can explore lot options while looking at zoning requirements for style, maximum lot coverage, etc. so they're in line with your vision.  Once we secure the lot, we can take the right amount of time to design your new home exactly the way you want it.

 

Flippers

 

Before we get too far into this, we will only work with quality flippers that do not cut corners and will stand behind their work.  We are not interested in working with flippers who do cheap lipstick jobs and disappear after they rake in their profits.

 

Quality flippers are actually a great asset to the buyer's market.  Most of us don't have the time to put in all the work required on that older or beaten up house that's in the perfect spot for us.  And they deserve to make a fair profit for their time and hard work.

 

Flippers, we will probably see an increase in inventory for you to choose from beginning this Spring.  We can help find the right project in the right area by analyzing these continually evolving market trends.  We'll also help create a profile for the target buyer to align with upgrades, review timelines and carrying costs and a complete Sales Proceeds Cash Flow analysis based on estimations of the market conditions on resale.

 

We've done a ton of flips with various clients and are ready to get started in helping you upgrade the homes people will need during this time of transition for them.

 

Camp/Rural Buyers

 

Were you hoping this was the year to finally buy that family cottage camp?  Are you thinking this might be the right time to consider upgrading your summertime escape?  Are you sitting in your home wishing you had 100 acres of trails to roam on your own property to self-isolate on?

This is a good time to start doing the leg work for all of this.  Let's get in touch with the lenders so see if refinancing at these unbelievably low interest rates can loosen up some equity to put towards a downpayment on that camp.  Let's get the listings in your hands for waterfront and rural properties so we're ready to roll when the time is right.  Let's talk about the different challenges around buying and owning a camp, waterfront or rural property, many of which aren't new because of COVID-19 such as riparian rights, well and septic systems, hunting regulations, boat access, taxation and capital gains, etc.

We LOVE helping with camp and rural properties.  We're Northerns through and through and sincerely enjoy helping everyone get their corner of the world to enjoy and share with family and friends.  Let's get started now - there will be plenty of fun to be had when COVID-19 is behind us.

 

Commercial/Industrial Buyers

 

The landscape for businesses is obviously changing drastically.  As we see massive amounts of people being laid off or shifted to working from home, the entire model of how you deliver your services could be changing, either temporarily or permanently. 

Some companies may be permanently looking to move to a more home-based model for their employees and require less office or retail space.  Some suppliers may be looking at expanding their warehousing space or moving to a location to better serve their clients based on changes to the clients' service model.  Some industries may be considering shifting their production model to reflect changes in the future needs of Canadians and the world.  

We're here to help analyze your business model and look at helping you make the hard decisions.  Let's take a look at all the stakeholders across your spectrum and assess your best options moving forward.

If you're an investor, there may be opportunities upcoming to repurpose properties that may no longer be required.  Possibly we can look into businesses who may require an Angel Investor to get their operations back to pre-COVID19 levels.  Bring us to the table to help make the right choices moving forward.

 

Leasing

 

Like the commentary above, your business may be going through a transition period that is looking more permanent as things continue.  Maybe it's time to look at a smaller space, maybe you need to increase your workspace or maybe there's a better location as your business model evolves.

If you're currently in a lease and are feeling a pinch or larger stress in fulfilling the terms of your contract, we can explore the possibility of a Sandwich Lease to alleviate some pressure.

We're here for any leasing needs you have - commercial, office, retail, industrial, etc.  Let's connect as soon as possible to make sure we're making the right adjustments for your needs and doing the proper due dilligence to get you moving forward.

 

Did We Miss You?

 

As we said at the start of this, every situation is unique.  And you're no different.  We can do it all and guide you through the daily changes, the potentially new norms and swirling market conditions.

 

Just reach out to us to explain your story.  We reaffirm that we are not judgemental regardless of your circumstances and we want to help you get through these challenging times.

 

Questions? Need Advice? Complete this form for more information.

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