The one most adaptable to change is the one that survives. This concept made famous by Charles Darwin is playing out daily in all industries given the pandemic. To adapt means to take the change in your environment and find a way to thrive in it. Adaptation is the strongest trait for survival.
In our previous posts, we have been following the impact of the pandemic on Real Estate. Using extensive research, we have tried to predict some outcomes for the RE Industry. We have looked at the state of mortgage applications, and have explored the idea of having the RE Industry grow into a digital one. As a follow up, we wanted to see and survey how agents throughout the United States were doing with regard to the pandemic. We wanted to get a look at how those with their “boots on the ground” have navigated the muck of a post-COVID-19 world.
In this post and our next post, we will be looking to multiple agents to gain a first hand account and report at how they are adapting to the changes within their marketplace. As we stated previously, much of the economy depends upon the Real Estate Industry. Its an integral component and litmus test for the overall health of the economy. Checking in with individuals whose livelihood is directly impacted by this shift is a cross-section worth examining.
Regardless of where you are located in the United States, it seems that April was a slower month than normal for Real Estate. From New York to Idaho to California, sales have decreased. For some, that decrease was more acute and intense. For many East Coast states, “stay at home” orders were given earlier on as the disease ravaged their more densely populated cities. Agents in the New York City, Boston, Philadelphia metro-areas felt a sudden slam on the breaks of an otherwise speeding train- the spring Real Estate season.
Frank Muccari, an Agent at Cronin &Company Real Estate, said that the initial impact was that of “Shock and Awe.” “It was a literal light switch. All forward momentum stopped for about a week,” said Muccari. Many Agents all over the East Coast experienced what felt like a complete halt in all RE activity. Speaking to Arthur Deych, an Agent at Red Tree Real Estate in Boston, put some of that experience into perspective. Deych stated that “people’s fear of losing their jobs… and independent business owners’ experiences of having future business cancel out for the next four months have caused people to not want to take the burden of such a large loan.” Many, even those that had already toured homes and planned moves, have left money on the table Deych explained. Agents understand and are experiencing on a micro and macro level the domino effect of this world-wide crisis. COVID-19 has “impacted everyone’s daily routines, priorities, economic position, family relationships as well as our physical, mental, spiritual, and emotional health. As for our business it’s made us have to rethink why and how we do everything,” says Virginia Corbett, a NYS Realtor with RE/MAX.
Although the East Coast and California have experienced what felt like complete stops to activity, other states with looser regulations have not. They have, however, still experienced a decrease in activity. In places like Boise, Idaho, a stay-at-home order was issued on March 25th. However, Real Estate Professionals made the initial “Essential” list, unlike many Realtor Counterparts of East Coast states. According to Lisa Kohl, a Realtor in Boise, Idaho with Keller Williams Realty, ” we have seen a roughly 10% decline in demand and new listings in the past month when compared to previous years. The two factors essentially canceling each other out with supply slightly lower than last April.We are also seeing a number of homes come back on the market and canceled listings, which is to be expected when it is difficult to even get to closing.”
Although there is a decrease, states in the midwest are still, for the most part, allowing for tours to happen within properties. This is sharply different from many East and West Coast cities that are more densely populated where Agents have been deemed “non-essential” by their governors. For Philadelphia Agents like Marilee Wolf of BHHS Fox & Roach Realty, the reality of being “Non-Essential” has a deeply negative impact on “everyday people.” Many need to move for “compelling reasons,” says Wolf. She adds, “there are families out there who are facing homelessness if they can’t buy a home or dire financial consequences if they don’t sell their home.” In places like Philadelphia, many are opposing this non-essential status citing that “food, air, food, and shelter” are all essentials for maintaining life. On top of having to navigate the shifts in business, Agents are also having to lobby for their right to do their jobs.
After the initial “Shock and Awe,” that many states experienced, there were signs of life. In New York, Muccari stated that about “ten days in [to the stay-at-home order], I started to see sprouts of life that gave me encouragement.” Like many agents and everyday people, the initial halt of activity gave way to people peeking out of their shelters and looking to push forward with their lives. The hairiness of how to navigate this new world is still shaky for some, but the desire is there. Muccari continues, “Is it business as usual? No, but creatively deals are getting done.”
As we stated in our previous blog, many in Real Estate are finally embracing using digital tools. This is a major shift within this industry as much of the process has been analog. Many feel as though they have to and should in order to continue to provide for themselves, their employees, and the overall economy. The way that Viriginia Corbett sees it is that she has an “obligation to do everything… to keep moving forward and generating economic activity.” She cites the idea that, “every real estate transaction keeps many people employed.” Considering all of those other businesses associated with the buying and selling of homes, one transaction moves economic activity for many professions.
Even though there has been a downturn in business, people are continuing to property hunt. Due to low inventory and the need to move during this time, the “demand is still there,” says Deych. “Boston is still very competitive. People are getting into bidding wars” he says. In Philadelphia, too, “more than ever buyer demand is greater than the supply of houses on the market,” says Wolf. She continues, “We have what is called a “coming soon” status so that houses can be promoted before going on the market. Used to be that everyone waited until the house went active to make their offers; now houses are selling before they go even go active. Agents really have to stay sharp and on their game to keep up with it.”
Similarly in Idaho, according to Kohl, “Despite everything that is happening in the world, the Boise area real estate market has been strong, surprisingly so. Prices are hitting record highs, new listings are seeing multiple offers, there are waiting lists to view the most desirable properties, and homes are selling in half the time they were even a month ago.” Prices are still stable in all places and have gone up in others, which is reassuring and similar to the SARS pandemic, as well. In places like California, “home buyers in Los Angeles and Orange counties signed sales contracts for nearly 60% fewer homes than the same period last year.” Even though there is a decrease in activity, overall, there are signs of life still in the RE Industry. Agents are figuring out ways to adapt, go virtual, and close deals.
Real Estate is, for the most part, a people business. When people cannot actually interact with others, it poses an issue for that business. For many agents, having that human contact, the ability to negotiate in person, is essential. For power Agents like Frank Muccari, the “service is the human interaction” and that is where he truly “makes [his] mark.” Additionally, there is a challenge of not being able to be inside of the homes, which “can be valued from afar.” However, they truly need to be felt and seen to fully grasp the value for Muccari. Not being able to go into people’s space is a concern.That idea of having to keep your distance from the space you are selling is very ironic and is also impacting Boston Agent, Arthur Deych. Deych, with a newly pregnant wife, is also trying his best to limit any home showings to vacant properties. Agents want to respect the homeowners, buyers, renters, and themselves in addition to the greater world. It’s not an easy space to navigate, for sure. For Agents in Philadelphia, vacant properties can not even be shown due to government restrictions. Marilee Wolf is trying her best to keep a long term, positive spirit whilst not compromising ethics for short term gains given the restrictions. Wolf stated that some agents are violating local laws, but that it is more important for her to keep her “reputations clean for the long term.” Many Agents nationwide are in precarious positions such as this where their livelihood challenges the current law and they are having to reinvent themselves and the profession.
All agents are in agreement and are surprised that many sales are happening at all without clients going into the homes they are buying. Being such a client-centered business, Agents are concerned for their client’s health and well-being on top of them being able to get into proper shelter. Even though sales are happening, some clients are having a harder time than others accepting the new way of buying and selling. Frank Muccari stated that where the experience is “truly taking a windy road is in the showings department. Sellers are struggling with who, if anyone, to let in. Buyers are having to choose if they wish to make one of the largest purchases of their life by watching a video.” Similar to Muccari, Corbett also cites the lack of in-person showings has both buyers and sellers skeptical to proceed with transactions. However, it seems that he very limited inventory is acting as a catalyst for buyers to make that leap of faith. To the end of clients learning the new normal, each state varies. For Pennsylvania and other states, many clients are confused about if they are allowed to tour homes, how offers work now, etc. For Wolf, a lot of “over communication” is required with her clients to “keep them up to date on what is and is not permitted.” Deych states that his clients are now, more than ever, looking to him for sound advice. They “want my confidence” as they are looking for someone to give them strength “with their decisions.”
For many agents nationwide, the shift to completely virtual was not too difficult. For Muccari, a very technology forward Realtor, it was pretty seamless. Muccari had always been a proponent of things like DocuSign and video conferences. He also always has used “professional photography, which truly helps show the home in its best most complete light.” So, for him, it has been business as usual in that department. Although there have been “inconveniences,” they have not been impossible to navigate.” Nationwide, Agents are happy if they have made investments in good digital tools and equipment as they are keeping them competitive during this challenging time.
Similarly, Virginia Corbett, made the adaptations happen quickly. Her team continues to “develop and refine Virtual Home Selling and Virtual Home Buying Solutions.” This includes many types of virtual consultations, showings, live stream open houses, and more. Virginia states she spends most of her “day on the phone, email, text, FaceBook messenger and Zoom talking to people.” If Agents were not already attached to their devices, it seems as though now they have completely committed relationships with them. Agents are clocking as many as sixteen hours a day on their screens finding ways to connect with clients, get listings, and complete deals.
Arthur Deych and his team at Red Tree Real Estate also adapted very quickly to the new normal. At the beginning of the stay-at-home order, they spent a bit of time making sure they had everything in their portfolio turned into virtual tours. They even gave tenants incentives ($100 gift cards) to make quality videos to showcase apartments.” These videos feature current tenants showcasing the apartment, explaining to new renters why the property has served them well, and even can include person edits with music. Its been incredibly successful for Deych in his teaming, securing over $200,000 in first months rent for his clients.
For Marilee Wolf, too, using these modalities are commonplace for her. She has been doing Zoom and Facetime tours for years since she works with a lot of out-of-state buyers. Another point Wolf brings up is how Agents should appear while doing these types of presentations. “I look polished, calm, and in control,” states Wolf. “The last thing someone wants to see is that the person selling their house looks like they’ve been hiding under the bed for a month.” For many people being stuck at home means to get lax in the personal grooming department. But, Wolf wants to send a message that she is working hard for her clients. Wolf also has enjoyed staying in closer contact with clients through sending a “video text message or a BombBomb video email.” By people seeing a personal greeting, “it makes a nice connection.”