We’re hearing from a lot of Buyers these days, eager to start (or re-start) their search for a home in Toronto and the GTA. Whether they are first-time Buyers seeing the opportunities in a slower market or people whose circumstances and housing needs have changed because of the pandemic, they’re all wondering the same thing:
How can I safely buy a home during COVID-19?
The good news: it can be done! But of course, much like everything else these days, the process has changed.
Shops, restaurants and offices everywhere are adapting their services, processes and physical spaces to help keep people safe. In short? We’re all looking to provide customer experiences that avoid the 4 C’s:
- Crowded spaces
- Close contact
- Confined spaces
- Coronavirus transfer
Fact: Businesses are being redesigned to avoid people and spaces – which gets especially interesting in real estate, where our goal is to sell spaces to people!
Below, we look at the steps involved in safely buying a home in the GTA during the COVID-19 pandemic.
Canadian banks have been working with Buyers throughout COVID-19 and we haven’t (yet) seen them apply any new across-the-board qualifying criteria. Here’s what to expect when getting pre-approved for a mortgage:
- More upfront info: Lenders will be requiring ALL documentation upfront in order to approve you for a mortgage: proof of income and a dated job letter (showing that you’ve been working during the last 30 days), paystubs, your T-4 or Notice of Assessment.
- Proof of income: As usual, you’ll need to be able to prove income to get a mortgage, so if you’ve been laid-off, even temporarily, now is not a great time to apply for a mortgage
- Investors are facing more scrutiny: Real estate investors are facing more scrutiny in getting approved for mortgages, given the uncertain state of the rental market and the ability of tenants to pay rent. They are also limiting the use of a HELOC (home equity line of credit) to fund a downpayment, so if you’re looking at buying a second property, you may not be able to borrow from one home to fund the downpayment on the other.
- Private Lending is drying up: Private lenders have in the past, been an option of last resort for people who couldn’t traditionally qualify for a mortgage. Unsurprisingly, they’ve significantly scaled back their risk, with loan-to-value ratios down and interest rates up, so there aren’t a lot of options for a private mortgage.
- Self-employed people take note: it’s definitely more challenging to get a mortgage these days. You’ll want a solid mortgage broker on your side and you should expect your lender to scrutinize everything.
- Lenders don’t like ‘exceptions’: Banks like certainty so when potential home buyers have anything odd in their application, they consider that an ‘exception’ – and these days, they don’t love making exceptions. Banks like a solid record of employment and income (they hate probationary periods and new jobs); they like a solid credit history; they don’t like income generated from Airbnb’s, etc.
- Your pre-approval is dependent on your application details being the same at closing: Don’t make any big purchases between getting pre-approved for a mortgage and closing (ie, don’t buy a car). Banks have always had the right to confirm that things haven’t changed since they agreed to lend you the money. They still have the right to confirm you are still employed before closing (though we haven’t seen them exercising that right these past few months).
- Interest rates are crazy low right now, and all signs point to that continuing. A COVID world means an uncertain economy, and that means low-interest rates.
- Getting pre-approved for a mortgage before you begin your search for a home is critical. As realtors strive to abide by the new normal of reducing contact and exposure, you can expect them to ask to for a copy of your pre-approval before taking you to see houses in person.
Pro Financing Tip: If you were pre-approved for a mortgage pre-pandemic, you need to talk to you lender again and get an up-to-date confirmation of how much mortgage you qualify for.
For years now, Buyers have searched for homes online and that’s taken on even more importance than usual. There are 3 main ways to search for a home online in the GTA:
1 – Get new listings sent to you directly from a REALTOR. There’s the old-school ‘Property Match Report’ that can get emailed to you daily, but if you’re working with a progressive REALTOR in Toronto, you can expect to be set up on ‘Collab’ – an online tool that lets you search in real-time. You can set up multiple searches, have listings emailed to you as soon as they are listed and communicate with your REALTOR about the homes for sale right inside the app.
2. REALTOR.ca is still a great tool (despite a dated appearance and some useability issues). Note there is a delay as to when homes get listed there – and
3. Brokerage websites and property listing aggregator sites: There are thousands of websites that list homes for sale in Toronto, from Zillow to individual agent and brokerage websites. Because of how data is controlled in Ontario, most sites don’t list ALL of the homes for sale, and individual sites that are manually updated are often out-of-date.
It’s also worth noting that some Sellers are choosing to sell their homes off the MLS, in order to avoid the extra COVID complexities that come with having dozens of potential Buyers through their home and the challenges in safely prepping and staging before sale. Top REALTORS have a few secret networks where we share these kinds of listings!
Househunting During COVID-19
Coronavirus has changed the order of the steps in the househunting process. Pre-pandemic, it was customary to tour dozens of homes in person and then do your homework and due diligence on the contenders- that process has essentially reversed itself.
These days, we start by doing our homework/due diligence and touring a home virtually – and only when we know it’s a serious contender, do we go see it in person. Think of the ‘virtual showing’ as your first showing – and the physical, in-person showing as a ‘second showing’.
So what’s involved in the pre-showing and virtual showing process? There’s work for both you and your agent:
- Research the neighbourhood (especially if it’s new to you) – pay special attention to the things that matter to you: schools, parks, nearby locations and amenities, etc. (Related: 88 Things to Consider in a Neighbourhood)
- Drive by the home and make sure there aren’t any location deal-breakers that you weren’t able to notice in the photos or on Google Streetview. For example, some people don’t want to live across the street from a cell tower or next to a school or old apartment building.
- Gather information about the property: Look at all the photos carefully. Check out the floorplan. Google the address. If there’s a pre-listing home inspection or status certificate available, read it.
- Read the whole MLS listing instead of just scanning it and make sure it meets your minimal standards. If you absolutely need AC and the house has electric heating and that’s a no-go for you, better to find that out before you venture out. Your agent can help you understand how to read the MLS listing.
- Tour the home virtually with your agent. There are a few different ways to experience a virtual showing:
- You and your agent might connect on Zoom or Skype and go through a 3-D walk-through tour together to see the flow and condition of the home.
- Your agent might physically go to the property on your behalf and use video or Facetime/Zoom to take you through the home together.
- Get a sense of prices – can you afford this home? We’re still seeing homes underpriced for bidding wars, so if your budget is $900K and you’re looking at a house that’s listed at $899K with a bidding war date, in a neighbourhood where similar homes sell for $1.2 million, it might not be worth the risks and extra effort required to see that home in person.
- Your agent is more important than ever: In the new world order, your agent will do more research and due diligence than in the past (and that’s a great thing for you!)
Remember: You can still see homes and househunt in person! You just have to do the pre-work and virtual showing in advance. to eliminate the homes that won’t be a match for you. Seeing and falling in ❤️ with a home is still an important part of the home buying process.
After the virtual showings, it’s time to see the serious-contender houses or condos in person. Here’s what to expect during an in-person showing:
- REALTORS: Open houses aren’t happening right now and aren’t likely to return until there’s a vaccine or the virus has been eradicated. You’ll need to work with an agent to see a property in-person.
- Are you safe and healthy? It’s critical that you don’t expose your REALTOR or the Sellers if you have any COVID-19 symptoms or have had recent contact with anyone with a confirmed or probable case of coronavirus. You’ll be required to complete a form attesting to that before you are able to see a home in person. Note that if you are seeing 3 homes in one day, you’ll likely need to fill out 3 forms, as each Seller and their brokerage will require confirmation. It’s a pain and REALTORS hate it too, but it’s part of our new reality for now.
- Transportation: You likely won’t be riding in a car with your REALTOR and will have to provide your own transportation (unless your agent is helping facilitate this via Uber).
- Personal Protective Equipment (PPE): You’ll probably be asked to wear a mask (and possibly gloves) and will be asked to sign some forms confirming that you’re healthy and haven’t been recently exposed to COVID-19 (more on that later). Your agent will be following those safety protocols too.
- Showing Restrictions: In most cases, the only people allowed to be present at the showing are the people who will be on title. Parents, kids and friends will be discouraged from attending. Most agents also won’t allow multiple showings to happen simultaneously, so it may be harder to get your ideal showing time, if someone has already booked an appointment at that time.
- Don’t Touch! You’ll be asked to reduce the number of surfaces you touch in the home, and your agent will be disinfecting door handles, etc. Everyone’s goal is to provide a safe showing experience.
- Condos: Some condos have strict visitor restrictions and are only letting residents enter the building, so you may not be able to see every condo you want to see in person. If they do allow you in the building, many common areas (eg pool, gym, party room, rooftop terrace) are closed and you likely won’t be able to see them, though thankfully, it’s usually pretty easy to find photos of everything online.
Making an Offer on a Home
Making an offer on a house hasn’t really changed a lot – most offers have been happening electronically for some time. These days, most agents are getting offers safely signed digitally (via Docusign or another secure program) and are communicating and negotiating with the Seller’s agent virtually.
I don’t expect we’ll see a return to in-person bidding war nights where 20 agents (and their clients) descend on a house and battle it out for hours, while waiting in cars and coffee shops. It was never a particularly effective way to conduct a bidding war and it makes even less sense now.
Pro Tip: Make sure your agent knows how to be persuasive and negotiate via email or over the phone. Look for a Certified Negotiation Expert who has been specifically trained in these techniques.
We’ve seen some big changes when it comes to closing on your new home. Pre-pandemic, Buyers had to meet in person with their lawyers to sign the mortgage paperwork and closing documents.
Good news: Virtual closings are now happening in Toronto! Progressive lawyers are now able to have you sign closing documents electronically, and all the main banks are honouring digital signatures. Make sure you ask about digital signing before you hire a real estate lawyer (we can recommend some great ones!)
Working with a REALTOR During Coronavirus
Ontario declared REALTORS Essential Services at the start of the pandemic, but that doesn’t mean they don’t have obligations to help flatten the curve and reduce exposure. The Toronto Real Estate Board and the Ontario Real Estate Association have set clear expectations for agents servicing clients in the midst of the pandemic and individual agents and their brokerages have set out policies as well.
More than ever, it’s important to have an agent you can trust representing you. With much of the process happening virtually, you’ll want to make sure you’re working with someone who has the experience and knowledge to guide you and who isn’t afraid to take the lead on the neighbourhood and home due diligence you would otherwise have done yourself.
When hiring a REALTOR to help you buy a home make sure to ask about how they are conducting virtual showings, their safety protocols for in-person showings and their experience helping Buyers during the COVID-19.
If you choose to work with an agent on a successful team, you’ll also be able to access listings that are coming soon or won’t be listed publicly on the MLS (that’s happening more than usual right now).