The Ultimate Guide To Buying A Home During Coronavirus

Certified Mortgage Advisor
NMLS 1701021
June 3, 2020

Coronavirus preppers for home buying

Buckle up, put on your masks. This is going to be a long column, but we're going to cover exactly how it's a bike at home during Coronavirus. We're going to give you a market-winning checklist. Here's the deal. Coronavirus has caused a lot of complications with real estate.

Market challenges you need to know

Not only do we have health precautions to worry about we have new lending restrictions because of the unemployment crisis that COVID is causing, and we have employment issues. We have a lot of people laid off. That means a lot of people can't get mortgages.

Let's all prepare for COVID impact

So you need to be extra prepared, more prepared than normal when than when you purchase a regular home. You need to be prepared to know exactly how the coronavirus is going to impact you. And we're going to cover that. I think of about 18 points to cover here. Then I have an emotional checklist here at the end. So let's go ahead and dive into this.

1. Verify employment status with employer

The first thing you need to do, I need you to verify your employment with your employer. So you need to talk to your HR department or your manager. You need to understand. If your hours are going to remain the same. We're in this weird, what seems to be the tail end of COVID. Who knows? It's hard to say, but you need to understand if you're going to be laid off? Will you be? For load. Will your hours stay the same? So you need to understand exactly what's happening. There's no point in applying for a loan and all to get loaded here injustice.

2. Plan for timeline and plan for speed

Also after that, you need to plan your timeline and plan for speed, because this is what people are calling a hot market. So you keep hearing people say, this is a hot market. What that means is homes are going very quickly. Homes are being listed and then offers several offers are being booked.

I have buyers who have put 8 to 10 offers on homes and lost all of those offers. So you need to make sure the earth timeline includes you being very serious and very adamant about moving because you need to be able to make the decision of once we're pre-approved, we're ready to shop for homes. Once we find a home we like we're ready to move on it and then have everything ready to go to start moving. You don't want to put an offer in, on home, but not actually be serious about buying because things will move very.

3. Talk to your LO about payments and max price

Next, you're going to talk to your loan officer about payments and the maximum price. So you need to figure out what the monthly payment is that fits inside your budget. That's going to be for your mortgage and you need to figure out what your max purchase price is. So you need to know the payments because you need to understand your budget. Do those numbers work inside of your budget, right? You don't want to be approved for $1,500 per month. But then you go and write offers on homes that cost, $2,000 per month. You're not prepared for that. You need to see those numbers from your loan officer and talk to them about that.

You also need to understand your max purchase price

That way you can understand your negotiation power. So your max purchase price really is your power in negotiating. What this means is this allows you to increase the purchase price and go above a listing price. When you put in your offer if you really want to win a house.

4. Define your payment flexibility and MAX payment

Next, you need to define your payment flexibility and your max payment. So here's what I mean by this? A lot of times I have buyers who are looking for a specific monthly price range. So maybe they want to spend no more than a thousand dollars per month on a mortgage, but then they go and look at a property and it's $1,010 per month. And they say, Nope, it crossed my $1,000 threshold.

So what you have to decide is what's your comfortable budget. And then what's, what do you have some flexibility in because things are going to change, right? So maybe it's a thousand dollars per month. But that has some wiggle room to go maybe up or down $50 from the baseline. Because what can change are things like your homeowner's insurance.

And even if you get into a payment, that's a thousand dollars per month, maybe a year from now, taxes increase in taxes now go up to $50 a month. Are you still going to be comfortable in that home? You need to make sure that you're comfortable. The budget has payment flexibility, and you're anticipating that you have a wiggle room. Otherwise, you're going to be caught off guard by every single monthly payment that changes there.

Absolute MAX payment

You also need to know your absolute MAX payment. So at the top of your flexibility range should be your max. And the max is that number that you say absolutely no way. Can it go over this? Because if it goes over this, then we're running into issues with our budget.

Know the cost that you'll be facing

You need to know these numbers upfront, because what ends up happening is most of the time people don't know any of these numbers upfront. They don't know their payment. They don't know their max price. They don't know their payment flexibility. They don't know their max payment.

No emotional decision

Then they get into an offer on a home and they're trying to weigh the emotional decision and you're trying to make decisions based on emotion. And when you make decisions based on motion, that's no stronger than how the wind blows from direction to direction every few minutes. You have to know these numbers before you get emotionally attached to a home. So you can make a smart decision based on the numbers. And then the emotions can fit inside those boundaries.

5. Set aside down payment/ closing cost funds

Next, go ahead and set aside money for your down payment and closing costs in your budget. You need to be prepared to spend this money for your down payment and closing costs. Talk to your loan officer. How much exactly do you need to bring to the closing table. Not just your down payment, closing costs included, have them give you estimates on these figures.

Separate money for home buying

That way you can set it aside in a separate bank account or in your budgeting software, or however, you set up your budget and manage your money. You need to make sure this money is set aside so you can begin to anticipate using it. And you're not going to use those funds when you're shopping for a home. Because the last thing you want to do is get to the closing table and not have those funds ready and available to close with.

6. Prep an "emotional" offer letter

Next, you're going to prep an emotional offer letter template. But what you want to do is create this template that you can send to all the sellers. So it's going to be a blanket thing. It's going to be a hate dear seller, and you're going to list out why you and your family want to purchase this home, and maybe you leave in some blanks for things that you can insert in there.

Template offer letter

Make it a template before you start putting in offers. That way, when you put an offer, as it's already done, you have a blanket template. You just need to fill in a few blanks and send that over to the seller. That's going to help your offer.

Stand out a lot more than other buyers. Because sellers are just seeing black and white contracts. If you just come in with an emotional offer letter, that seller wants to be able to carry on all the nostalgia, all the legacy from their home into good hands. So having a strong, emotional offer letter shows them that they can take the energy. They poured into this house and push it into a good and deserving family.

7. Set aside earnest or good faith money

So you also want aside set aside earnest or good faith money. Earnest money is used sometimes. And sometimes it's not, it depends on the market, but earnest money basically tells a seller, Hey, we're serious about this contract. Its money that you put in with your contract ends up going towards your down payment, but it shows the seller, Hey, we're extra serious, or we're willing to put money on the lineup front in this contract to show you how much we want this home.

So make sure you have this money set aside, in addition to your down payment and closing costs, if you're going to be adding it to the contract. Again, this is because you don't want to be spending this money if you're going to anticipate using it here when you're putting in some offers.

8. Health and safety when viewing a home

Next, this is where you want to start looking at homes. You did all this prep work, and now you can actually start the meat of the process where you're starting to look for homes and find what you want. So you want to set up virtual showings with your real estate. Hopefully, at this point, you've found an agent that you like to work with. And what you can do is set up some virtual showings.

Check the pictures first

Obviously again we're doing social distancing as much as possible. So maybe you're doing this on a zoom meeting with an agent, or maybe you're doing an in-person, but doing a virtual showing is going to help you understand what's out there in the market first. You don't want to just blindly go on these showings. Because it's not safe and too, because it really is a waste of time. Even in a safer environment, you want to be able to see pictures and details about a house and have a realtor walk you through. What's going on with these listings. Then narrow that down to a small list of homes you want to see, because what you're going to do is you're going to end up seeing tons of homes online.

Narrow down your choices

What you want to do is narrow that down to a few homes that you actually want to see. Then you can narrow that down to maybe one or two homes that you want to write an offer on. Next talk to your agent about health and safety precautions. When viewing a home, eventually you're probably going to go to a showing.

You're going to want to see the home in person, talk with your agent about what to expect with health and safety before you actually get there. That way you can understand all the precautions that need to go into play and know that you're going to be safe, know that the seller is going to be safe, and everyone's going to be treated with safety and respect as you go in.

10. Have your agent review your wants/needs list

After that, I want you to create a needs and wants list. Where all you have to do on a piece of paper is I want you to draw a line down the center on the left write "Needs" then on the right, write "Wants". Then list out what's in each of those category.

Make your real estate agent your critique

Then what I want you to do is show that to your real estate agent, have your real estate agent critique your needs and wants list because often we'll you'll end up finding is that you have far too many ones on your needs list. There are far too many things that just shouldn't be on your needs list that is keeping you from buying a home.

And what you'll do in combination with this needs. And this virtual showing where you're looking at homes online, looking at pictures with a real estate agent is, are going to help narrow down and get better expectations of what's actually on the market.

Because when you don't know what's on the market, it can be easy to think. I want a three-bedroom home with two baths and I want a large backyard and I want it to be brick. And I want it in this price range, but then you start looking at homes and you recognize that the needs list doesn't match your purchase price and vice versa.

You have things that aren't matching together and you need to set those expectations correctly before you see a home in person. And before you write any offers.

11. Talk to agent about ways to make your offer more appealing

Next, I want you to talk to your agent about how to make your offer more appealing. So keep in mind when a seller lists the home. This is a real-life example of things that we're seeing within 48 hours. I've seen some agents have up to 28 offers within 48 hours, 28 offers. Some agents are seeing more, some agents are seeing less, but you're going to be amongst the competition.

How to make your offer appealing

So you need to figure out a way to make your contract stand out so ways that you can do that. EMD, how many seller credits do you ask for the amount of closing time, another one that's obviously big is your purchase price. So you want to make your offer really shine and have an offer letter in there is going to be fantastic as well. But you want to give terms to the seller that convince them to say, we want to accept that buyer's offer because you're going to be amongst a ton of competition.

You need to make sure that you're standing out and your real estate agent needs to have a strategy to help you stand out.

12. Make solid offers on homes

Next is to make solid offers on homes you like. This is not the market to go and try to shortcut everybody else's price. I know it's fun to see a home listed for a hundred thousand and say, oh, we'll offer him 85 and see how it goes.

But in this market, it really just doesn't work. You're going to see so many other offers above the asking price. That means if the seller asked for a hundred, we're seeing homes get sold. Maybe 110, 115 hundred and 120. So you need to make sure you put in your best offer, put it in up there, especially if it's a home, Are you not willing to pay a little bit extra money to get that home?

Obviously, you don't overpay, but I see far too many people go through this emotional roller coaster, they say, we love that. We love this house. This is the perfect house for us. It's everything we need. And then they go and they write a really awful offer on it. They shortcut the seller and they say we're not going to pay for it all where they're asking for it.

Then they don't get the offer. And then they find another house. This is the perfect house is the one we want. And then they offer far less than the seller is asking for. Okay. And they go through this cycle up and down and eventually get exhausted and say the real estate market's ready. You didn't whatever.

If you want a home, you have to pay market value for it. That's why it's listed as a specific price. The market is most likely asking for that price. If you want the home to pay for the home, show the market, how much you want the home to win it.

13. Shop for homeowner's insurance online/phone

After that let's say at this point here you have an offer. Now you can go ahead and shop for homeowners insurance either online or over the phone. So you're gonna talk with some insurance agents and get quotes on insurance for your property.

14. Get an inspection and review with agent to determine absolute needs

Also, go ahead and get a home inspection and review that with the agent to determine absolute needs only. So the inspection report is going to detail anything with the home that needs to be fixed.

Anything that's a concern for you moving forward into that home. Things like plumbing issues, electrical issues, maybe foundation, roof issues things with appliances and fixtures.

What are absolute needs?

But what you need to make sure is that when you go to the seller and ask them to fix anything, you're only focusing on absolute needs. Far too often. I see people want to request things like fixing, caulking, putting in new electrical plates and putting in, or doing new paint. If you waste your time on those types of things, a seller might walk away from an offer for 10 to 12, other better offers than yours, right?

Because you put in an offer and they chose yours, they also have a ton of other backup offers. So we don't want to be picky here. If it's things like caulk, it's not difficult to go on YouTube and figure out how to recall something. It's not difficult to go to Lowe's and buy a $5 electrical plate. It's not difficult to do these things. Don't take these minor items and let them completely derail you're purchasing a home. So talk with your agent about only what's absolutely necessary for you to move into that home.

15. Provide everything

Next, as they're going through the loan process and the process with your realtor, you want to provide everything so documents, E-signing documents to your loan officer, as soon as possible.

This is so important because it's really easy to get lost in the mix of everything that's going on when you're buying a home. And to feel a little overwhelmed and not turn in things when they're asked of you. But if your loan officer asks for documents and they need them as quickly as possible so that they can push your loan into underwriting and get it closed quickly, because if they can't close your loan on time, then you're out of contract then you risk losing the home after going through all that work.

So if your lender says, Hey, I need pay stubs, I need W2's, bank statements. You need to work on those as soon as you possibly can and send those in. So your loan can be processed and you can get through that stage as quickly as you can.

16. Scanner app to send documents to lender/realtor

You can use a scanner app to send documents to your lender and your realtor. Again, this is going to help with social distancing to make sure that we're not spreading anything. You don't have to go take your documents and send them over to somebody. You don't have to go somewhere to sign something. You can do everything on your phone and you can download a scanner app, just code to the app store or the Google play store or whatever you use on your phone, and just type in a scanner.

You're going to find free scanner apps that you can take pictures of documents and scan them. Most likely your employer has pay stubs. You can download it as a PDF. Whoever you did your taxes through last year was going to have PDF versions of W2's and most likely 10 forties, your HR department might have W2's and pay stubs as well.

You can get all this stuff digitally and it's gonna make the process so much easier and smoother and less. It's going to be required of you if you do it that way.

17. Plan to transfer your utilities and mail

You can do this by phone, and you don't have to go in anywhere. You can simply look up who has utilities in that area, call them, and get those transferred over.

18. Close on your home!

Then finally, you can close on your home. What I would do is talk to your lender and title company about if an e-closing is available.


Sometimes it depends on the state you're in and what lender you're working with. You can do an e-closing and that's basically where there's an online notary. You can sign all your documents digitally and no one has to be around a closing table.

It doesn't always work. There are only a few amounts of transactions that are eligible. But if you are eligible, that's a great thing to do, to take advantage of.

Emotional Checklist

Finally, I think this is the more important piece. Let's talk about the emotional checklist. It's easy to talk about, the actual logistics that go on when we're buying a home.

But this market is so different. Buying a home naturally is something that can be frustrating and overwhelming, and it's exciting and fun, but it has its pitfalls and moments of anxiety. So when we have something like the Coronavirus, that's adding extra anxiety to it, we need to make sure we have our emotions and expectations set properly.

Expect offers to move fast and transactions to move slow

So first let's talk through some of the things I don't want this to be depressing and difficult to, or discourage. I just want you to understand exactly what's going on so that you're prepared and you can move into it with a level head and say, Hey, this is the challenge before us. We're willing to tackle this challenge because buying a home is part of our plan.

But if you go into this and assume that there are going to be no challenges because of the coronavirus, then you're going to be in for a time. That's really not going to be fun. Okay. So first you need to expect the offers are going to move fast and transactions are going to be going to move. So offers are going to move fast.

That means that when you're trying to put in offers on homes when you're trying to bid for a home, everything is going to move very quickly. You might put in an offer, you might see a house, and then you might have to put an offer immediately. And then a seller might counter you within an hour, and then you might have to come back. That's going to move very quickly.

Then once you're under contract, things might move a little bit slower because of what's changing with lending requirements and employment verification requirements. That might move a little bit slower.

Expect homes under contract before you can see them

Also expect homes under contract. Before you see them. I know this can be super discouraging, but if you see a home online, sometimes before you even can go view the property, it might have a contract or an offer already placed on it because the market is getting so competitive that people are writing offers before they even see the home. Just understand that's a possibility. So when you're looking for homes, try not to get super emotionally attached to these homes, look at them, and say, is this a good opportunity for us? Would this home fit the bill of what we need? Great. If it does, let's look at exploring it.

There's always a better home for you

Then if something comes up and it's pending, all right, there's going to be another one. There will always be another house. And what usually ends up happening is it usually works out for the better or the new home ends up being something that was a better situation than the one you initially thought you wanted in the first place.

Expect to be beat out by high offers

Also, expect to beat out by crazy high offers. No one expects you to overspend on. But there are a lot of people who are simply just paying as much as they possibly can because they want the home because the markets are really competitive. I'm seeing people who are putting in offers 10 to 20% above the asking price and they're paying cash.

That means they're not going to have any issues with financing or with the value of the home. They just simply want the house. And so just understand that something that you could run into, that's all I need to put your best foot forward when you're writing an offer.

Expect last minute loan changes and re-verifications

Anticipate last-minute loan changes and verifications. So because of COVID, it's caused an unemployment crisis, which has caused lenders to change restrictions entirely and change requirements entirely on different types of loans.

So we were seeing some people who were under contracts, who immediately had their loans denied when lenders changed their credit score minimums. You have to just anticipate this happening. You have to anticipate these last-minute changes or document requirements that a lender asks for and understand that it's not your loan officer's fault.

It's not the lender's fault. They're trying to do the best that they can. They want to help you close a loan too, but there are guidelines that are trying to follow. And then also there's employment. Reverifications right. People are getting laid off day by day. It's understandable that a lender might need to verify your employment several times during the course of your loan, because a loan process, might be 30 days, so they might verify it here and here, and maybe the day of closing because they want to make sure you're still employed when they give you that loan.

Expect to pay market value

Then, also expect to pay market value. All right. I mentioned this earlier, it's fun to see a homeless at, for a hundred and say, let's give them. But you're going to have to pay the market value in this market. It's a seller's market. That means there are not a lot of homes. And a lot of buyers are bidding for these homes. That's driving the price up as driving the demand up.

So you need to pay market value. If you go in trying to short all of these home values, you are not going to get anywhere far with your offer.

Show grace and gratitude

Show grace and gratitude. The people you're working with your realtor, your lender, your insurance agent, title company, the seller, the listing agent, everybody in the deal all wants the same thing.

Everybody wants to close. Nobody wants restrictions and things to be difficult. Nobody's trying to put up roadblocks in front of you just for fun. That's not fun for anybody. Trust me. So through this process, we need to show grace and granted. Tell your realtor. Thanks. Tell your loan officer. Thanks.

Thank people for things to help them understand that you see, Hey, I know this is frustrating, but I really appreciate what you're doing because I know this is difficult. I know this is a challenging market. Help them understand that. You're going to win so much more favor by being kind and polite and understanding than if you try to be aggressive and mean because nobody's trying to screw you over. Nobody's trying to screw you out of a deal.

Maybe a few people are, and obviously we have boundaries and we have contracts in place. That's why we have contracts is to legally protect ourselves, but show grace and gratitude as you go through the transaction, that's going to make everything so much easier, lighter, and feel fresher.

Patience and level-headed to make wise decisions

Then finally stay patient and level-headed to make wise decisions. If you come into this feeling emotionally turbulent, you're going to have a really turbulent experience. Home buying is not going to be fun, but if you come in and say, Hey, we're going to roll with the punches. This is something that we're ready to learn. We're ready to experience. We had plans set up in place. We were ready for payment. We were ready for a down payment. We had all of our expectations set in line. We showed grace and gratitude to the people around us. Then you're going to have an enjoyable home buying experience, even if it has its challenges along the way.

No fear if you are prepared

So home-buying during COVID does not have to be a nightmare. You just need to make sure you're extra prepared for everything going on. Ask questions, get a team. Start a plan. That's going to get you to the place where you want to win the house you love. So if you want to learn more about putting in an offer letter to a seller, this video over here is going to help you understand exactly how to write that so that your offer is more appealing to a seller.

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