The Real Estate Corner with Rick Seese: Questions Surrounding Coronavirus Part 2

The following, including photos, was written and submitted by Rick Seese.

After 30 years of real estate management and teaching the business to hundreds of agents, I now focus solely on helping clients buy and sell homes.  But now I also have time to share my experiences and knowledge with you, the readers of Lowell’s First Look, on a monthly basis.  I invite your ongoing questions, whether you are planning on purchasing your very first home or your next home, or your last home.  Just email me your questions at [email protected].

The Coronavirus real estate related information is constantly changing.  Part 2 of the April edition contains some additional questions and updates that were related to last week’s answers.  I will do my best with the most current information I have available.

Here is the biggest change and newest interpretation:

As I mentioned last week, the Stay Home Stay Safe directive by the State of Michigan has been extended through April 30, 2020.  This directive covers buyers, sellers, Realtors and many other businesses, other than real estate.  The purpose of this information is not to debate the directive or the rules, but only to point out what the law and interpretations state.

The most important new interpretation is involving home inspections.  The previous rule did proclaim Home Inspections Services to be Essential.  However, the rule did not allow a buyer to attend the home inspections.  The new interpretation DOES allow the buyer to attend the home inspections.  This opens the door for a buyer to make an offer on a home, include the normal 10-day home inspection contingency, attend the home inspections and to view the home in person for the very first time.  Viewing the home in this manner can be included in the home inspection contingency, but the process needs to be agreeable to both parties in writing.  Consequently, If the buyer decides that the pictures were much better than the in-person walk-through, the buyer could withdraw from the purchase.  Again, proper language must be agreed upon by both buyer and seller.

This potential process also begs the question of how safety precautions should be included.  If a buyer and seller decide to proceed in this manner, they may want to get proper advice to stay safe, during and after the home inspection process.  Each home inspector will most likely have documents for both parties and a suggested process.

What can Realtors do and not do?       

In review, under the current order, Realtors may NOT:

1. Show properties or conduct business face to face. This includes ALL property types such as vacant homes or vacant land.  A buyer who has sold their current home and needs to purchase a new home is not currently considered “critical” or an “emergent need”.
2. Install signs or lockboxes on new listings.
3. Remove signs or lockboxes from listings after closing.
4. Attend Home Inspections (even though a buyer may).
5. Attend a closing.
6. Travel to do any real estate business.

What Realtors CAN do:

1. List properties using digital signatures or scanned documents with signatures.
2. Market properties online.
3. Have occupants provide photos, videos and virtual tours. Professional photographers are also deemed to be Non-Essential Services.
4. Negotiate purchase agreements using digital signatures or scanned documents with signatures.
5. Help provide buyers with financing arrangements, follow through with the terms of a purchase agreement and arrangement for the closing of the transaction.

 What other real estate related services are considered Essential? 

There are aspects to some Essential Services that have limitations, but for the most part the following have been deemed to be Essential:

1. Appraisers
2. Surveyors
3. Home Inspectors (limited to purchase agreements)
4. Workers such as plumbers, electricians, exterminators, and other service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of residences.

Are there rules for new construction?

As understood from the Michigan Executive Order involving residential construction, construction workers may undertake projects that are necessary to maintain the safety, sanitation, and essential operations of a residence during the emergency.  However, any non-emergency maintenance or improvements to residences is not permitted.

Construction projects that do not meet these criteria cannot be started or progressed while the order is in effect. This includes any such projects that were already underway at the time the order was issued. For those projects, workers are permitted on site only to carry out “minimum basic operations” (cited under section 4(b) of the order).  This work is limited to in-person tasks that are strictly necessary to preserve the current condition of the project while the order is in effect, such as putting in place temporary security and weatherization measures. All other in-person work on the project must cease until the restrictions of the order are lifted and normal operations resume.

Supply and Demand vs Unemployment and Recession?

The biggest question that we all want answered is how will the economy bounce back after the restrictions are eased?  There are obvious damages involving the capacity of business and industry to rebound and provide the unemployed with their same jobs.  Unfortunately, some businesses and manufacturers may not reopen and that will result in continued higher unemployment.  Our housing industry has slowed to a small percentage of what has been the normal for the past several years.  However, the supply of available homes remains low and it appears that buyers will still be there to provide the demand.  Based on conversations and the indications of buyers currently ready to jump back in the shopping mode, there is still plenty of housing demand strength.  Home sales provide a key component to jobs, in many areas.  The National Association of Realtors® estimates that one job is generated for every two home sales.  Using that ratio, 1,000 home sales generates 500 jobs.  The ratio is derived from the economic impact of an existing home sale.  Each home sale contributes about sixty thousand dollars to the economy or Gross Domestic Product (GDP).  Therefore, a quick rebound of home sales and the continuance of new construction, can help cushion some of the unemployed throughout various industries.

Time will tell us more.  

First if all, May 1 is right around the corner.  Many believe the Stay Home Stay Safe Order could be extended again.  Some believe that the country should reopen now.  No one knows what will happen over the next couple weeks, but there are discussions already taking place in Lansing and Washington D.C., as to how to proceed.  One Michigan proposal, that has not been approved, but could be considered, outlines a five-phase plan to put Michigan back to work safely. The proposed “Open Michigan Safely” plan rolls out each phase based on data points and measurable risk.  Under the plan, phase one would begin by updating Michigan’s list of critical services to include residential and commercial real estate, and many other businesses.

This plan does not signal a return to “business as usual” but is a measured approach that allows for travel and requires guidelines to protect Realtors®, their clients, and the public.  The critical part to any reopening will involve safety.  Everyone must adhere to all safety measures to keep the virus from returning.  That probably means the continuance of social distancing, washing and sanitizing hands, and even face mask utilization.  I’m not tossing my mask.  In fact, I just ordered more.

Better news is coming, but please be safe, be healthy and be happy.  And don’t forget to be thinking of others and the potential consequences of just one infection spreading to those you love and care for.

Rick Seese works with buyers and sellers of residential, commercial and industrial real estate.  He is an Associate Broker with Greenridge Realty, Inc. and has been licensed full-time for 43 years.  If you’re interested in reaching out to Rick for more information, or have a question for the monthly article, you can contact him via email ([email protected]), visit his website at www.rickseese.com or Facebook page at (www.facebook.com/Rick Seese), or call/text him at 616-437-2576.