BUYING & SELLING DURING A HEALTH CRISIS

Many current and future homeowners, are feeling concerned about the real estate market due to the health crisis and financial crisis that is slowly developing. Real estate is impacted by market volatility and financial liquidity/solvency concerns. Real estate is a commodity, and property values fluctuate as the market changes due to many influences that include supply and demand, rules regulations and laws, seasons, micro and macro economics, demographics, consumer sentiment & confidence and many other factors. All these impact local markets connected to the larger markets. The extend of changes and corrections also depend on the current status of a market and the current values of local markets.

For example, during the last recessions in 2008-2009, the London regional market saw a 2 year stagnation in growth in property values for average priced homes, and only executive high-valued homes saw a drop in property values. Compared to property values in Toronto during that time that saw a large market correction in overpriced homes.

Though the market is London is currently still very active and hot, we are already experiencing and anticipate that a lot of buyers and sellers are choosing to put their plans on hold to wait and see how this crisis develops and hopefully resolves, sooner than later.

Our recommendation now because of the health crisis, is first and foremost to protect your family and household. Follow the guidelines and instructions from your local Public Health Authority. See also our HOMEOWNERS GUIDE TO THE HEALTH CRISIS & FINANCIAL CRISIS.

Only list and sell your home if you have to. For example estate sales, required relocation, divorce/separation, or you have have already purchased and now have to sell in order to complete your purchase closing.

Only buy if you have to, or if you have found your dream home, or that great deal and you absolutely have to make it yours. We are recommending you follow the local real estate board and provincial real estate association directive that sales to be virtual as much as possible, with no open houses, and protection guidelines in place to limit exposing your home and family’s health. This might change in the near future should the government impose further mandatory lock-downs.

Make an offer conditional on financing if you need a mortgage, and conditional on an inspection if you have been unable to view it in person only virtually due to showing restrictions.

A few additional important considerations:

Mortgage application turnaround times have increased during the current climate.
If an appraisal is required, additional time will most likely be required as appraisers may have limitations or delays in accessing subject properties. Some lender are allowing adjusted full appraisals with interior pictures through windows, and also drive by appraisals instead.
Rush transactions will be met with challenges and are not recommended at this time.
If your financial status e.g job loss changes prior to your mortgage closing, the lender will most likely pull out and cancel the mortgage as mortgage approvals include clause that the lender has the right to cancel the transaction should there be any significant change to your material and financial status.
We have identified the top lenders that will allow mortgage documents to be signed via e-signatures and also lawyers who are able to complete transactions virtually so that no in-person meetings are required. For now the Land Registry Office is open and running and we are able to complete mortgage transactions and land transfer transactions during social isolation and lock down for as long as the LRO remains open. Currently, there are no plans to close the LROs, however in the event of closure, then real estate transactions will not be able to proceed and you would need to seek extensions wherever possible. The good news is that everyone is in the same situation! The bad news is that there is no right in most re-sale agreements to insist on an extension, however, most people are understanding and you will have to rely on their goodness as well as common law principles to extend the transaction.

To protect yourself against this, have your Realtor include a clause in your purchase transaction to protect you in case of delays in closing as result of the crisis. Example: The parties herein acknowledge and agree that they are required to close this transaction notwithstanding any impacts of COVID-19, save and except the closing of the Land Registry Office(s) and all financial institutions. In the event the closing cannot occur due to a shutdown/disruption of the Land Registry System and/or banking system, then the closing date shall be automatically extended to the fifth (5th) business day following the date upon which said systems have returned to operational status and can clear funds accordingly.

These are extraordinary times we are living in with so many variables and uncertainties. Keep yourself informed and continue to stay calm and work together to keep our families, clients and communities safe. Follow the direction of your local health unit and the government to help flatten the curve of transmission so that our health care system can function well to help those who get sick with serious symptoms.

I’ll include in the text below links to our municipal, provincial and federal agencies, as well as other helpful links to keep you updated on facts. For regular updates on the economy and markets as the COVID-19 pandemic develops and evolves over time visit my Blog: http://imortgagebroker.ca/blog/

Also visit our Vlog regularly for more helpful information: https://www.youtube.com/channel/UCNYRjVZjsNph8ymVFEeBQhw

We are always here to help. Reach out to us.

For Continued Updates on The COVID-19 Pandemic, please click below:

Middlesex Health Unit

https://www.healthunit.com/news/novel-coronavirus

Ontario Health

https://www.ontario.ca/page/2019-novel-coronavirus

Government Canada Public Health

https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease-covid-19.html

World Health Organization:

https://www.who.int/emergencies/diseases/novel-coronavirus-2019

Factual Statistics Coronavirus COVID-19 Global Cases