The coronavirus outbreak has significantly impacted the ways in which homebuyers go about finding and purchasing their new home. At this point, it’s hard to say if buying and financing a home will ever be quite the same.
During a panel called “Advances in Ways to Buy a Home” at Inman Connect Now on Thursday, presenters Vishal Garg, CEO and founder of online lender better.com, and Adena Hefets, CEO and founder of rent-to-own company Divvy Homes, discussed with moderator Clelia Peters how the pandemic is impacting financing for homebuyers.
“What we’re seeing in [general] is a number of banks are pulling back,” Garg said. “And a lot independent mortgage banks are pulling back … because of delinquency rates.”
“So we see sort of the worst of all worlds happening in terms of consumers having limited supply even if they have great credits,” Garg added. “And at the bottom of the market … that compounds the already significant effect we’ve seen from people not being able to walk into a bank branch or mortgage office.”
Hefets also pointed out that in addition to a trend of tightening of lending requirements, there’s been a vast migration from multi-family apartments out to single family homes.
Both panelists noted that the pandemic has brought about a number of procedural challenges in getting deals closed during this period of social distancing.
“We had instances where consumers found the home they want to buy, but the appraiser was afraid to go into the house,” Garg said. He also pointed out that remote notarization is “actually still not legal in a number of states.”
“We’ve seen a lot of the transactional infrastructure that had been built around the real estate industry that basically time had forgotten,” Garg added.
In the stress of the pandemic, Garg noted that many of the traditional ways of conducting a transaction from start to finish have simply broken down.
As we move forward from the coronavirus crisis, Garg and Hefets said those processes will have to update into the modern age.
“The way you view and close a home is going to change pretty significantly,” Hefets said. “[Use of] video, closings with Zoom notary … There’s those logistical things that feel like they’re just going to be fundamentally different.”
Garg, Hefets and Peters agreed that loan borrowers will need to adapt with the changing homebuying landscape. Garg said he’s already seen those individuals who traditionally went straight to their bank or their “mortgage guy or gal” first for a loan are already making their way to better.com to learn about alternative options.
In closing, Peters asked the panelists how Realtors might stay relevant amidst the sea change in real estate financing.
“My biggest push is you’ve got to get creative,” Hefets said. “Your customers are depending on you … to help them access a home, whether its a home for rental or for purchase. Look at financing options … and instead, explore these new technologies.”