What Does it Mean to be a Virtual Home Buyer?

What Does it Mean to be a Virtual Home Buyer?

An evolving guide at every step of the home buying process

by Erica Keberle
Licensed Real Estate Salesperson | Compass
Brooklyn | Sullivan County Catskills | NY
updated April 5, 2020

Real estate functions will start returning to normal when you’d feel safe making out with a stranger in a bar.

The pandemic is affecting every aspect of our daily lives and I believe this will cause lasting cultural shifts along with permanent changes in the way we socialize and do business. Real estate is a highly interactive business involving human, aesthetic, and emotional connections and we’re learning to adjust to a virtual environment at every step in the process.

I wish I had a crystal ball… But, I predict in-person showings will not resume until late May or early June, and that social distancing (or at a minimum, limiting) practices will linger at every step of the buying and selling process. Perhaps new development and vacant units will prove to be an exception; however, I suspect open houses will be conducted by appointment only and with precautions and that sellers will want every precaution for occupied sales (not to mention co-op and condo boards).

Even during a pandemic, because real estate decisions are both financial and at least 80% emotion-driven, there will be buyers and sellers transacting due to life changes, personal desires, and opportunity. Whether you were looking for your first home, forever home, or escape home, the pandemic has magnified the significance of “home” in a way that is causing some of my buyers to move ahead full speed, some to reëvaluate their position, and some to consider or fast-track escape searches outside of New York City. 

So, until we’re all making out with strangers in bars again, what does it mean to be a virtual buyer? I’m a Brooklyn-based Real Estate Agent with a side passion for renovating and selling Sullivan County Catskills getaway homes, meaning I will touch on both markets. As we’re dealing with conditions and policies that are subject to daily and weekly change, this information is intended as a snapshot guide that in no way substitutes counsel from your own attorney and lender. I am doing my best to help my clients navigate during this unprecedented time. Please don’t hesitate to contact me with questions. 

A special thanks to the following trusted professionals who provided their insights and who are working hard to cultivate a cooperative culture to get deals done safely and effectively in a challenging environment: 


How to be a Virtual Buyer from Brooklyn to the Catskills


Virtual House Hunting

Under Governor Cuomo’s Executive Order, real estate agents cannot conduct in-person real estate showings with buyers, including open houses. Virtual showings are permitted. I predict that we won’t be able to return to “normal” in-person showings until at least late-May or June, and I suspect some social distancing will continue for months, so we should all prepare to conduct virtual real estate business for awhile.

How do virtual showings work?

– Real estate agents can record video tours to share with buyers via email and social media, or conduct live video tours as long as there is no one else in the home. In addition to professional photos and floor plans, other virtual house hunting tools that might be available for some listings include 3D floor plans and 3D tours, and I suspect these tools will start to become more widely used in this new environment.

– For occupied homes, some real estate agents are virtually helping their sellers create video tours to share with buyers. Current guidance also allows real estate agents to conduct a live virtual tour via Facetime, Zoom, Instagram Live, YouTube, etc. if the seller leaves the property during the tour. 

– For vacant properties, real estate agents may enter the home to record video tours or conduct live virtual tours. 

– The New York State Association of Realtors’ guidance is that buyers can have unaccompanied showings when no one else is in the home and with advance consent of the seller. 

Brooklyn Notes: Sellers, check with your co-op or condo board about policies for real estate agent access and virtual showings during the pandemic.

Catskills Notes: Live virtual tours in the Sullivan County Catskills could be more limited if the house does not have WiFi or reliable cell service.

Virtual Deals

Will buyers make offers and purchase properties based on virtual tours? We do not yet have data on site-unseen transactions, but anecdotally, while there are fewer new deals, there are contracts being signed. From the date of a fully executed contract, under normal conditions, it takes 45-60 days to close a cash deal, and 60-90 to close a financed deal. Closings are still taking place, but expect some delays. Buyers who want to continue social distancing in a new Brooklyn home or have a Catskills escape in time for summer recognize an opportunity to get ahead of the curve if they are willing to become virtual buyers.

Pre-Approval Letter from Your Lender

If you are financing, a seller will not consider an offer without a pre-approval letter. This process remains largely unchanged as lenders were already primarily communicating via email and phone. Most mortgage specialists continue to have the ability to provide loan scenarios, run credit, process paperwork, and issue pre-approval letters via email.

Home Inspection

Under the Governor’s Executive Order, certain real estate services, including home inspectors, are considered “essential services,” and the New York State Association of Realtors’ guidance allows real estate agents to open a property for a home inspector. Many home inspectors are sole proprietors and some will conduct inspections that adhere to social distancing practices including vacant properties, with no one home, and with safety precautions and procedures in place. While buyers cannot be present for the inspection, inspectors email thorough reports with photos.  

Brooklyn Notes: While vacant townhouses or new development inspections might be easier, access to inspect common areas in co-ops and condos, such as the roof and mechanical room , could be more limited if it requires a super or management company. Sellers should check with their co-op or condo board regarding pandemic policies. Anecdotally, it seems that fewer inspections are being done and that some co-op and condo buyers are choosing to waive the inspection altogether. Discuss options with your real estate agent and attorney.

Catskills Notes: Most Catskills for sale homes have lockboxes which help minimize social contact. Home inspectors also do not have to pass through common building areas or be accompanied to access the roof and mechanicals. Home inspections do not seem to be holding up deals.

Offer Submission

This process remains largely unchanged as real estate agents already submit offers via email, so you can work virtually with your real estate agent to prepare your offer.

Contract Signing

This process also remains largely unchanged as communication with your attorney is usually done via phone and email, and e-signatures and wiring deposits are already frequently used to execute contracts. As offices are generally closed, there is no one to receive a check in the mail, so make sure your bank can wire money for the deposit (usually 5%-10% of the purchase price due at contract signing). 

Brooklyn Notes: Obtaining due diligence materials (financials, board minutes, by-laws, offering plans, etc.) from condo and co-op buildings can cause contract delays if the management company is unable – or unwilling – to provide them electronically. Some management companies are still very “old school” requiring attorneys to make in-person appointments to review these documents.

Catskills Notes: Anecdotally, there are some minor delays but nothing significant holding up contract signings.

Virtual Closings

Cash deals are easier to close because they do not involve a bank or require an appraisal. Mortgage applications are still going through processing and underwriting. Expect some delays – perhaps two weeks slower than normal – but this will vary between banks. Add this to your due diligence questions when interviewing lenders and comparing rates and fees. Also consider closing with cash and then refinancing once you’ve settled into your new home.

Appraisal

Under the Governor’s Executive Order, certain real estate services, including appraisers, are considered “essential services,” but social distance practices must still be observed. Whether or not virtual appraisals are allowed will depend on your lender. Only some lenders are allowing desktop appraisals where appraisers do not actually go into the property. This is an important question for your lender because if they do not allow virtual appraisals it could cause significant delays.

Brooklyn Notes: Citizens Bank and Wells Fargo have been able to use desktop appraisals when an on-site appraisal isn’t possible. Check with your lender.

Catskills Notes: Ulster Savings is able to look at alternative appraisal options on a case-by-case basis. There are some appraisers going into certain properties with social distancing and safety precautions. Again, check with your lender.

Title

A title search scours public records to verify property ownership and reveal any claims or liens on a property. A “clean” title is required to complete a real estate transaction. Your attorney will order a title search which is performed by a title company. As long as records can be accessed online, title searches do not seem to be causing major issues. 

Brooklyn Notes: Public records are mostly available online allowing title searches to be completed virtually. There is a challenge accessing documents recorded between the date of the title report and the closing date, so title companies are using different measures to protect themselves and buyers. It’s an imperfect system that they are working to improve, but it is not preventing closings.

Catskills Notes: Sullivan County records dating back to 1990 are available online. For information prior to that year, attorneys are requesting the title policy from the seller. If that is not accessible, further delays could occur.

Survey

A survey is the process of locating and measuring a property’s boundary lines to determine the exact amount of land owned. To my knowledge, surveys cannot (yet) be completed virtually. 

Brooklyn Notes: Co-op and condo purchases do not require surveys, but townhouses do. While surveys are done on the exterior of the home, attached townhouses would require a surveyor to enter a home to reach the rear yard. Discuss options with your real estate agent and attorney.

Catskills Notes: Buyers usually have a property surveyed to make sure any issues with easements or encroachments are resolved before closing. Most surveyors are sole proprietors and are still working as the survey is completed outside of the home.

Brooklyn Co-op Quirks

Co-op apartment purchases require board approval, a process that varies between buildings. The purchase application can be completed virtually, but some traditional management companies and boards still require multiple hard copies, and applications can, in many cases, be 1000+ pages. The ability to submit a virtual application and virtual board interview (via video conference) will vary between buildings. Speak with your real estate agent.

Final Walkthrough

The final walkthrough gives a buyer the opportunity to confirm that the property is in the condition in which they agreed to buy it and usually takes place shortly before closing. To limit social interactions, real estate agents cannot be present with buyers for final walkthroughs (although they can video conference), so buyers and sellers will need to coordinate access arrangements. Discuss with your real estate agent and attorney.

Closing Day

Closings usually take place at a conference table surrounded by the buyers, sellers, multiple attorneys, and stacks of paper. In this new environment, closings are more complicated but are getting done virtually with careful coordination by dedicated, smart, and cooperative attorneys (so make sure you talk with your real estate agent about securing one!). Closing day is usually 45-90 days from the date of a fully-executed contract under normal conditions. As a result, if you are “in contract” on April 6th, you might expect to close between late-May and early-June (cash deal) to late-June or early-July (financed deal). I predict social distancing practices and virtual closings will still be the new normal – or at least the preferred normal – even into the summer months.

Cash transactions are still complicated to coordinate but less so than financed deals that require an additional level of coordination with your bank. New York State is allowing e-notarization (via video calls) during the pandemic, but some banks still require original documents signed and notarized, and attorneys are getting creative with “car closers” who are driving documents to buyers who can sign at a social distance. Some banks are doing virtual closings and allowing attorneys to work out alternative ways to close, so talk with your lender. As an alternative, you may also be able to give your attorney POA (“power of attorney”) to close on your behalf. Once again, talk with your attorney. The ability to wire funds (rather than mail paper bank checks) is also a critical tool in the closing process. 

Brooklyn Notes: Co-op closings require additional coordination with the co-op’s attorney and management company, so the ability to close virtually will vary depending on their level of cooperation. Talk with your real estate agent.

Catskills Notes: While it is difficult to coordinate logistics, attorneys have been closing cash deals without having to meet anyone. Financed deals can also close without anyone present where buyers give their attorney POA (power of attorney) to close on their behalf.

Real estate agents have always had a critical role in helping buyers move from search to close. In a new environment requiring an even higher level of coordination to conduct business virtually, I believe it is even more important that we continue to guide, troubleshoot, problem-solve, nudge, communicate, advise, console, and celebrate with our clients and colleagues with a spirit of empathy and compassion for everyone involved. For more information, please do not hesitate to reach out with any questions as we learn to navigate this new virtual real estate world together.

Be well. Stay safe. ❤️

Erica Keberle
Licensed Real Estate Salesperson
Compass
erica.keberle@compass.com
(917) 690-5405
https://www.compass.com/agents/erica-keberle/
375 Schermerhorn Street
Brooklyn, NY 11217

Disclaimer: This guidance in no way constitutes legal counsel, and is subject to change. Please consult with your attorney and lender.

House Hunters: Fixer-Upper Apartments

Buying a Fixer Upper Apartment: Tips from an Experienced Renovator/Real Estate Agent

Many people think of “fixer uppers” as tackling a gut renovation of an historic Bed-Stuy brownstone or Ditmas Park Victorian, but fixer uppers come in all shapes and sizes, so if you’re looking to purchase an apartment consider a co-op or condo in need of work. The majority of buyers do not want to take on projects as minor as small repairs, paint, and floors. Even in our current more buyer-driven real estate market, it’s no surprise that the most stylishly renovated homes are still seeing high demand. And who doesn’t want a move-in ready Instagram-worthy home?   

I worked with this client to create an updated space that sold for almost $200K above the pre-renovation value.

If you can see past dated cabinets, vinyl tile, poor layout, and even sad staging, you might be able to score a better deal, build equity, and achieve your dream home. If you have the enterprise but lack vision, work with an experienced real estate agent who can help you see past the crud, estimate costs, and connect you with renovation professionals. As it happens, I am an experienced renovator and real estate agent (!!) and here are a few fixer-upper apartment tips:

Tip #1: Establish a Budget

Whether you’re buying with cash or financing, you need a budget. Work with a qualified lender to determine your maximum purchasing power and how much cash you’ll have left after your down payment and closing costs. Establishing whether you have $5,000 or $100,000 for renovations will help determine how much work you can do – from a flooring and paint refresh to a full fresh start. If you cannot live in the unit during renovations, be sure to plan and budget for alternate housing (including extra takeout while you wait for your new kitchen or a nice gift for the friend who lets you crash).     

Refinishing the floors, a new railing, and fresh white paint were all budget solutions with a huge impact in this narrow condo.

Tip #2: Scour the Real Estate Listings

An experienced real estate agent knows how to scour hundreds of listings to find a unit with real potential. Here are a few insider tips:

Look for “sponsor unit” co-ops. A sponsor unit is still owned by the original owner or the corporation that first converted the building into co-ops. These are sometimes in original condition or renovated with minimal basic finishes. This is a chance to start fresh or add your own personal touches if some of the more major work has already been done. As an added benefit, sponsor units do not require co-op board approval and will often allow for less than a 20% down payment. 

Estate. Condition. These two words could be your best friends if you’re on the fixer-upper hunt. These units are not necessarily being sold by the heirs to a deceased owner. “Estate condition” more often refers to the condition – ranging from total wreck to in dire need of style and function updates.

Units that have been actively on the market more than 90 days without much interest might be suffering from dated finishes – or even just poor staging – and could be a good opportunity to grab a great apartment if you’re the buyer who is able to visualize the potential. A word of caution: Not every fixer upper has potential. Look for a good existing layout (or one that can be easily changed). Moving plumbing and electric are two big ticket items, and very often it is difficult, if not impossible, to move toilets and sinks in an apartment. Ask to see the building’s renovation policy and any history of renovations in the building before making an offer or signing the contract.

Search units just above your preferred max price. You might find a negotiable fixer-upper in a neighborhood you thought was our of your price range, and you can make upgrades over time. Some “move-in ready” units might have inexpensive or outmoded finishes, but have natural light, great views, a highly desirablelocation, potential to create a second or third bedroom, or original details. A unique or redeeming factor is a must and will add to future resale value. 

Gutting the lower level transformed a dingy duplex basement into a fresh lounge, and increased the pre-renovation value by almost $200K.

Tip #3: No Pain, No Gain

Whether you are handy or need to hire everything out, every renovation takes time and money, and makes a mess – so just embrace the temporary madness. Minimize stress by making a solid plan BEFORE putting a hammer through a wall. Make a list of everything you think you want to do and spend some time surfing Pinterest for design ideas. Then, get multiple bids and decide where you’re willing to compromise and cut down your wish list. Choose finishes – tile, paint colors, light fixtures, etc. – before you start work. Because unexpected issues come up with every renovation, front-end planning will help you manage changes during work. Are renovation pains worth it? Yes! You have potential to build instant equity while creating a customized apartment and achieving your dream home. Whether you’re ready to dip your paintbrush or tear down walls, there is a renovation project to fit every budget and level of enthusiasm.  

Easy Cosmetic Fixes

  • Paint. Paint. Paint. It’s no joke that paint is the cheapest and easiest way to refresh and reimagine your space. Don’t be afraid to use color…appropriately.
  • Refinish wood floors. Changing the stain color can take your apartment from dated 1980s oak to light Scandi-modern or rich traditional. 
  • Kitchen cabinet refresh. If your cabinets are in good shape, altering the color and updating hardware is an economical way to achieve a big impact. Hire a professional who specializes in cabinet painting. Trust me.
  • Bathroom tile and vanity. If your tile is satisfactory, new grout can go a long way to making the entire space feel new again without creating a huge mess. Changing out the vanity, medicine cabinet, and light fixture might be all you need to to go from blah to spa.

  Bang for Your Buck

  • Lighting. Think about improving the amount, quality, and placement of light, in additional to stylish fixtures. 
  • Built-ins. Custom or semi-custom, when you live in an apartment, storage is everything and built-ins can be life-changing. 
  • Exposing brick, beams, or other original features. Create something your friends will want to Instagram. Unique features can also set your apartment above the competition upon resale.
  • Doors, Moldings, and Hardware – oh my! These items are often overlooked, but details are like the accessories that perfect an outfit and make an apartment look like a million bucks. 

  Pricier Projects

  • Replace kitchen cabinets. There are endless cabinet options to fit every budget. Just be sure to buy quality so they last for more than 6 months. Replace the countertops, sink, faucet, and everything else while you’re at it. It’s true that kitchens and baths sell, so if you don’t over-invest in finishes you will likely see a return.
  • Air Conditioning. If the building will allow AC, consider installing a ductless system. It changes quality of life, can reduce electric bills, and improvesresale value. 
  • Windows. If you’re buying into an older condo building, consider replacing old windows with sound and heat-reducing windows. 
  • Electric. Make sure your home inspector checks the electric. Installing a new electric panel and rewiring an apartment is doable but not cheap. 
  • Structure, foundation, roof, heat, hot water, sewer line. Keep in mind that when you’re buying an apartment, you’re also buying into a building. Review building documents for recent or planned work and have your home inspector look at these elements. The overall health of the building can affect maintenance/common charges and financial assessments on owners to pay for projects. 

Should You D.I.Y. Real Estate?

Real Estate Agents are often characterized as sleazy, knuckle-headed – or possibly both (or worse). The “Phil Dunphy” although dedicated and good-hearted is portrayed as the classic doofus who maybe couldn’t hack it at another job.

Or the scheming Alec Baldwin “Glengarry Glen Ross” real estate salesman with questionable morals and contrived pitches. You might have even run into one of these characters while open house browsing on  your own. As is the case in any industry, there are good, bad AND great real estate agents, and I can attest that I’ve had the pleasure of working with some true professionals in the business.
But maybe the more important issue is: Why use a real estate agent at all? And, it’s a good question. Buyers and sellers today have access to *most* of the same online search tools, so the value in working with an agent is having an experienced, organized, smart professional with good instincts and a solid B.S. radar, to help you navigate a complex process involving numerous players  when a significant amount of your hard-earned money is at stake:

  • How does the market look right now and where are we headed?
  • What neighborhoods make the most sense for short-term v. long-term investing?
  • I’ve lost two bidding wars… What else can I do??
  • How much is my townhouse worth? How much would it be worth if I renovated the kitchen?
  • Is that condo overpriced? How much are closing costs?
  • The buyer’s attorney is not returning my attorney’s phone calls. Help!
  • The buyer/seller is threatening to back out of the deal. Help!
  • We have 2 kids, a dog, and a cat – how am I supposed to stage to sell?
  • I can’t keep track…Did we see that unit last weekend? Did I like it?
  • Can we move that wall/sink/oven? How much will it cost?
Bottom line is Real Estate Agents can play many roles during the buying and selling process: consultant, analyst, advocate, salesperson, marketer, business manager, and therapist – just to name a few. So, as you consider your options keep in mind that DIY Real Estate is as risky as DIY Plumbing: You might end up with a bigger mess going at it alone after a couple YouTube tutorials, so know when it’s time to call in a professional and work with someone you trust!