In The News

Shelter-in-place has made buying or selling a Bay Area home a lot more complicated

Kathleen Pender May 16, 2020 Updated: May 16, 2020 4 a.m.

Photographer Tom Sparks creates a 3-D interactive tour of a house for rent in Sausalito in April. Many real estate transactions have had to go virtual.
Photo: Scott Strazzante / The ChronicleRealtor David Grega (right) directs photographer Tom Sparks as Sparks creates a 3-D interactive tour of a home in Sausalito in April.

Realtor David Grega (right) directs photographer Tom Sparks as Sparks creates a 3-D interactive tour of a home in Sausalito in April.

Real estate has been deemed an essential service in California and the Bay Area, but the process of buying and selling a home has changed dramatically under shelter-in-place orders and continues to change as those orders are revised.

Open houses have been banned since the the first order, replaced largely by virtual tours and, more recently, virtual open houses. In-person showings are allowed only if virtual ones are not feasible, and even then must follow strict physical distancing and disinfecting protocols that go far beyond disposable shoe covers.

In the past, buyers were usually given disclosures about a property after they’d seen it. Now they’re being asked to read the disclosures, and be serious about making an offer, before they’re let in to see a house, said Linnette Edwards, founder of Abio Properties in the East Bay.

Added to the usual thick stack of disclosures buyers and sellers may get are at least four new ones related to COVID-19.

Instead of having an appraiser enter a home, banks in some cases are allowing automated, drive-by, or FaceTime appraisals.

And instead of going to a title office to sign closing documents, buyers and sellers are signing electronically. For papers that need to be notarized, a notary comes to their house in mask and gloves, with hand sanitizer and fresh pens. “We did a sign-off on the hood of a car,” said Kevin Barrett, sales manager with Chicago Title in San Jose.

Real estate was not on the list of essential services when six Bay Area counties issued their first shelter orders in mid-March, but was added when the orders were updated March 31. Although the orders are very similar, the rules for real estate vary somewhat by county and how they are interpreted by county counsels, local Realtors associations and brokerage firms.

Technically, people were not even supposed to change residences unless it was impossible to defer a planned move or for a limited number of other reasons, said Gina Zari, government affairs director with the San Mateo County Association of Realtors. “Some agents are adhering strictly to the rules. Some aren’t. It’s a huge problem,” Zari said.

In-person showings are allowed only when virtual ones are not feasible, and then only if they follow strict rules. There can be no more than one agent and two people from the same household in the house at the same time, visitors must wear masks, use hand sanitizer and stay 6 feet apart. Surfaces and door handles must be disinfected between showings.

Most agents require visitors to sign a new declaration that basically says they don’t have coronavirus and acknowledge the risk of entering the home. All this takes time, making it harder to schedule appointments.

The March 31 orders limited in-person showings to homes where the occupants had moved out. Stagers couldn’t come into the home, construction was not allowed except for emergency repairs and landscaping was only allowed to prevent fire hazards.

Since then, the rules have been relaxed, a bit. Since May 4, agents can show occupied homes when a virtual showing is not feasible, but the occupant cannot be in the house at the time of the showing. The other rules for in-person showings still apply. People can now move for any reason and landscapers can return.

Most counties now allow stagers to come in as long as the home is unoccupied at the time, although the San Mateo Realtors association says staging is only permissible if it’s “essential to the sale of the home.”

Construction projects can resume if they follow health and safety protocols, but here too the rules for things like painting and remodeling vary somewhat by county.

From mid-March through April, many deals that were already in escrow closed, although it took longer and prices were sometimes negotiated downward. New business fell precipitously.

In San Mateo and Santa Clara counties, April sales of single-family homes fell 50% and 36%, respectively, compared to April of last year. Median prices, however, were up 2% and 5%, respectively, according to MLSListings, the counties’ multiple listing service.

Agents are using technology to a much greater degree, whether it’s showing homes via smartphone video or ordering an interactive, three-dimensional digital tour. Some agents hold “virtual open houses through Instagram, Facebook Live or Zoom,” Edwards said. “An agent sets a time and people can hop on and see the home and ask questions.”

Before March, Sparks Media Group, which provides real estate photography, videography and 3-D tours, got four or five orders a month for virtual tours. In mid-April, “we got 35 orders on three days,” owner Tom Sparks said. His business in the first half of this quarter is up 446% over the first half of the previous quarter.

Many agents say that in the past two to three weeks, business has picked up thanks to the relaxed rules and pent-up demand.

“A month ago it was pretty quiet. The market really shut down. The ability to show property was extremely limited,” said Blaine Morris, a Compass agent in Marin. “Now I’m incredibly busy. It has been night and day. All of the people who wanted to buy a house in the normal spring market, and all those who wanted to sell, are all out now.”

Amanda Lee and her fiance Tyler Ainsworth, who are 24 and 25 respectively, started looking to buy their first home in late February after their roommate moved out and they couldn’t afford their Oakland apartment alone. “We had been putting in offers in Martinez leading up to the coronavirus” but kept getting outbid, Lee said. On March 27, they put an offer on a three-bedroom, 1½-bathroom home and it was accepted. “There was only one other offer and the sellers were super flexible, they gave us almost $15,000 in credit, which you never would get if it wasn’t for the coronavirus.” They paid $684,000 and closed April 23.

Lee said, “It was scary putting all of our eggs into one basket, a house, at a time like this,” especially when they saw friends getting laid off and the stock market tanking. But she thinks a home will be a good hedge against inflation, which she expects to pick up.

Morris says there are “no more COVID discounts” on homes under $1.5 million. In central Marin, the market for homes under $1.1 million is “very, very hot.” The $1.1 million to $1.5 million range is “mixed” and while the luxury market is “not as busy.”

That’s partly because many first-time buyers are moving out of San Francisco, had a down payment in cash — not stock — and can still get government-backed mortgages, which go up to $765,700 in most Bay Area counties.

The market for jumbo loans over that limit has become very difficult because of various problems in the mortgage industry. “Some lenders have incredibly high rates and fees” on jumbos. “Others are competitive,” Edwards said.

Kathleen Pender is a San Francisco Chronicle columnist. Email: kpender@sfchronicle.com Twitter: @kathpender