The coronavirus outbreak has brought on unprecedented personal and economic challenges, impacting millions of lives and virtually every industry, including real estate.
But while the business of buying and selling homes has changed, it certainly hasn't stopped. If anything, the methods have become more streamlined, out of necessity, thanks to technology.
It might take a while to assess the impact COVID-19 has had on the real estate market, and on your finances. If you don't think you'll be able to comfortably carry a big purchase, wait a little longer to determine your capital flow.
If you're thinking of buying or selling right now, consider your individual circumstance and your risk tolerance. Liquidity issues and accurate valuations of real estate investments can be considered immediate risks, but the long-term outlook is a bit more unclear.
If you do decide to buy or sell property right now, it's not all bad news.
Buying property might be the biggest purchase of your life, so it could feel daunting to do it sight unseen, but we must be getting more comfortable with the idea. According2 to real estate brokerage company Redfin, 28% of homebuyers last year made an offer on a property without seeing it first. That number jumped to 45% this past year.
Technology! That, and a good agent. You'll still want someone on the ground who knows the neighbourhood.
Traditionally, buying property involves open houses and tours, meetings with agents, walk-through inspections, and an appointment to sign and close the deal. However, with travel restrictions and social distancing measures in place, we've had to find more creative approaches to this process.
Now thanks to drones, virtual viewings and 3D property tours, you can do all of this digitally without having to go overseas, across town (or even leave your home). You can even sign your contract remotely.
At the beginning of 2020, and as a direct result of COVID-19, rental property sales website Roofstock3 saw site traffic from investors in Asia jump 500%; in Germany, 450%; in Australia, 250%; and in the UK there was an increase of 100%.
Zillow4 is one of the top real estate listing hubs in the US for selling, buying, renting or financing a home. It claims to have over 110 million properties in its database. Its competitor, Global Listings, claims to have more than 2 million properties in 96 countries5. (Try to narrow your search, folks. That's a lot of houses to browse through!)
Virtual property showings have increased tenfold. They provide prospective buyers with an immersive 360-degree 3D viewing experience while sticking to social distancing rules. There are hundreds of platforms to choose from, depending on your budget.
While the technology is there, more "seasoned" agents might have trouble figuring out how to use it. However, some of the more popular 3D viewing apps don't require expensive equipment or complicated software. If you can use the camera on your smartphone, you can probably create a virtual home tour, too.
An appraisal will determine what a home is worth and is required by most mortgage lenders. The house's location, the neighbourhood and comparable properties will be considered.
An inspection, which is recommended but not typically required, will tell you what sort of condition the house is in. The home inspector will look at the house's exterior and interior, including the roof, the plumbing and electrical system.
Appraisals and inspections both tend to be done in person but there are alternatives.
Desktop appraisals can be done using market research, as well as tax and recent sales records. A hybrid approach would take that information and add to it: photos, a video chat walk-through, and a drive-by appraisal to check "curb appeal".
Some lenders might even waive property inspections because of social distancing. However, this comes with its own risks. Whenever possible, it's better to get a full inspection of the house before you buy.
Once you've found your perfect home on a property website, you can reach out to a mortgage provider for pre-approval to start the process. Almost everything else can be done virtually. The New York Times article 'Real Estate Transactions Go Virtual' says:
New and updated contract management systems have helped make wet-ink documents, faxing and messenger services obsolete in the contract-signing process.
Perhaps the opportunity is bit further afield and you're thinking of buying property in another country. Still need a bit of help? HSBC Premier customers can talk to their Relationship Manager, get exclusive wealth insights and apply for an overseas mortgage, easily and online.
Yes, but you should still take your financial situation into consideration even if you do qualify for a mortgage. There have been some changes to how lenders are assessing affordability, and this may affect your application. If you already have a mortgage, it might be possible to remortgage to a new lender or switch mortgage rates.
Waiting times may be a bit longer than usual, and there may be few new options for mortgages, especially if you proceed with your application by telephone or online. How you close the mortgage deal will depend on where you live and the current rules around social distancing.
We continue to support our retail and wholesale customers globally to help them cope with the impact of the coronavirus pandemic. As well as supporting our customers, we've committed more than USD20 million of a community donation fund for programmes and partners that offer medical aid, address food insecurity and widen access to help for vulnerable people.
To find COVID-19 support from HSBC in your area, use this tool or speak to your Relationship Manager or local HSBC branch (hours and opening times may vary).
Still exploring your options to invest in overseas property?
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HSBC Holdings plc has prepared this article based on publicly available information at the time of preparation from sources it believes to be reliable but it has not independently verified such information. HSBC Holdings plc and the HSBC Group (together, "HSBC") are not responsible for any loss, damage, liabilities or other consequences of any kind that you may incur or suffer as a result of, arising from or relating to your use of or reliance on this article. The contents of this article are subject to change without notice. HSBC gives no guarantee, representation or warranty as to the accuracy, timeliness or completeness of this article.
This article is not investment advice or a recommendation nor is it intended to sell investments or services or solicit purchases or subscriptions. This article should not be used as the basis for any decision on taxation, estate, trusts or legacy planning. You should not use or rely on this article in making any investment decision. HSBC is not responsible for such use or reliance by you. Any market information shown refers to the past and should not be seen as an indication of future market performance. You should always consider seeking professional advice when thinking about undertaking any form of prime residential or commercial property purchase, sale or rental. You should consult your professional advisor in your jurisdiction if you have any questions regarding the contents of this article.