Gabriela Neagu, a real estate agent with the San Francisco Bay Area-based indie Red Oak Realty thought she had a pretty straight forward transaction. She was representing the buyer for a condo that was set to close in 21 days.
A month later, the seller is still trapped in the Wuhan Province of China, ground zero for the global coronavirus epidemic, and Red Oak Realty officially has what may be the first coronavirus-related contingency. It’s certainly the first for the brokerage.
The property was in contract on January 25. Neagu said she knew the seller was in China celebrating Chinese New Year, but at the time, the fears associated with coronavirus hadn’t reached their current level.
“Three days later down the line, I find out the seller is in Wuhan,” Neagu said. “A couple days after that, everybody from the embassy was taken out of Wuhan. I didn’t know what to make of that.”
Now, with the seller locked down in Wuhan, negotiations began on certain contingencies. As a fiduciary to her client, Neagu doesn’t want her buyer to miss out on the deal so she was able to get the seller to agree to pay for the home inspection and appraisal if they can’t get back to the U.S. in time and the buyer decides to walk away.
The seller also agreed to pay for an extension of the original 30-day mortgage rate lock. But there’s still a lot of uncertainty.
“I don’t know if he’s going to come back in time or if he’s going to agree to extend it for another month,” Neagu said.
There was talk of getting him to designate someone with power of attorney, but the proper documents couldn’t be notarized in time.
Vanessa Bergmark, the CEO and owner of Red Oak Realty, explained that contingencies aren’t really common in the Bay Area, due to the competitive nature of the market. Usually, all of the inspections and disclosures are done up front, so the buyer knows the deal before writing an offer.
But even with contingencies being rare, she’s never seen one for a reason like a global virus epidemic.
“Being in California, we’ve had fire issues,” Bergmark said. “I remember years ago when we went through the banking debacle and the banks started closing, we had four houses that had been funded in one day and they actually, strangely enough, had recorded the loans but the fund never came in.”
“There’s been these little things that have come up over time, but I haven’t seen one around a virus,” Bergmark added.
Bergmark suggested, that, if you are trying to sell a property and plan on traveling, you should consider giving someone locally the power of attorney to close on the property, just in case you get stuck somewhere.
This could be just the beginning though, as coronavirus continues to spread. As of Monday, China had seen 77,150 cases of the virus and a death toll of 2,592, according to the Washington Post. The U.S. has confirmed dozens of cases of the virus and it’s beginning to take a toll on the U.S. economy as the Dow Jones plummeted more than 1,000 points Monday.