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Covid-19 Is Forcing Real Estate Agents To Sink or Swim
End of March real estate agent Abby Tia got a call from a fellow agent bringing buyers to one of her listings, a roughly $2 million three-bedroom co-op. The buyers and agent, Ms. Tia learned, would be wearing gloves and masks.
That wasn’t all. “He asked that I be upstairs in the apartment before their arrival, as they didn’t want contact with anyone in the elevator,” said Ms. Tia, “They also requested that I open all doors, closets and drawers in advance so they wouldn’t have to touch anything—and that I not talk while they were there.”
The request was a surprise. “I was laughing a little bit about it,” she admitted. The spread of coronavirus in Italy and Washington was in the news; it had barely appeared on Ms. Tia’s radar.
Just over a week later, the world-wide pandemic has upended the lives of every American. It has rocked the nation’s economy, sending the stock market into free fall after years of sustained growth.
For Ms. Tia and her colleagues, it has transformed the nature of their business virtually overnight, calling a halt to many open houses, shuttering condo sales centers and brokerage offices, slowing down showings and unsettling buyers and sellers. The move has quickly forced agents, who are largely independent contractors and rely on commissions for their income, to brainstorm new ways to sell high-touch investments in a no-touch world.
Last weekend, agents T. Roy and Jake Herbrand held a ‘live not open’ house on Instagram and Facebook for a $2.399 million home in St. Lake City, Utah.
“I have been in business for 40 years, and this looks like a cross between 9/11 and 2008,” said Herbrand. He said the crisis has brought together the worst of both the terrorist attacks and the financial crisis—the deaths, the business closings and the financial meltdown.
The degree of disruption to the real-estate market has varied across the country, depending on each state’s reported number of cases and their different responses to the spread, according to people familiar with each market. Some agents fear it is just the beginning, especially if cities go into full quarantines.
“We might see a period where things come to an absolute halt,” said T. Roy.
The Centers for Disease Control and Prevention is recommending that all gatherings of 50 people or more be postponed or canceled across the country, and that people maintain a distance of at least 6 feet from each other, essentially rendering open houses impossible. In cities like New York and San Francisco, such precautions are mandatory.
Some real-estate agents are also backing a petition to ask the National Association of Realtors to halt open houses nationwide.
For social media, they used the hashtags #businessnotasusual and #dontyoudarecomeheretoday.
In the Seattle area, the country’s first flashpoint for the spread of the disease, the local multiple-listings service disabled agents’ ability to input, search or view open-house information in a bid to curb large gatherings and promote social-distancing measures. The move followed Gov. Jay Inslee’s emergency declaration that temporarily closed bars and restaurants and capped all public gatherings at 50 people.
Driven by low inventory and well-paying technology jobs, the hot Seattle market had showed little signs of slowing. In early February, Windermere agent Erick Olson said the police had to be called in to direct traffic at an open house on the city’s east side that had attracted over 200 people.
Last weekend, even as virus anxiety mounted and case numbers ballooned, two open houses were slammed with people, said the listing agent, Regina Kraviz. One property, a four-bedroom house asking $1.05 million, attracted between 20 and 25 groups. “People still want to see houses because they have nothing else to do. They also still need housing,” she said.
Ms. Kravitz said she and the other agents tried to keep groups going in opposite directions to maintain social distancing measures, and noted there is a typical natural spacing over a three-hour time period. She also provided slippers wrapped in plastic, and began making his own sanitary spray out of bleach and alcohol to clean down surfaces before showings. These days, she is filming virtual tours of his listings in case he stops showing altogether.
Meanwhile, in Houston, Texas, where the reality of the coronavirus is only starting to hit home, agents said they haven’t yet seen a decline in market activity.
“More concerning to people is the fact that oil prices have crashed,” said Paige Martin of Keller Williams. “The implication of this crash is that nearly all oil-and-gas companies will need to make sizable personnel cuts. While most of those cuts haven’t happened yet, a good number of individuals in the industry are concerned for their jobs.”
In the Washington, D.C., area, real-estate agents speak of a pause, rather than a rupture of their business.
Michael Rankin of Sotheby’s said that the firm adopted a policy of holding no open houses for 14 days. Mr. Rankin had two closings on Monday, one on a $4 million single-family home in the upscale Kalorama neighborhood, the other on a $1.8 million property in nearby Dupont Circle.
“Everybody looked at each other and said, ‘These are interesting times, but we need a place to live and we’re really excited about this,’” said Mr. Rankin. He noted that the buyers brought their own pens to the closing and sat far away from the lawyers.
In some markets, deals are starting to fall through, with some buyers citing losses from the stock-market plunge. Others are expressing concerns about where home values will be after the virus subsides.
“There are going to be layoffs,” said Janice Corley, CEO of Re/Max Premier. “This has a big effect on our buyers because they’re the owners and CEOs of these companies.”
Shana Rohde-Lynch, an agent with Compass was on the verge of closing a deal for a six-bedroom home listed for $3.77 million. It had been in escrow for nearly a month. On Sunday night—the day before the financing contingency was due to be removed—the buyer’s agent called and said the buyer pulled out of the deal. The down payment was supposed to come partly from stock sales the buyer no longer wanted to make, given the decline in the stock market and uncertain times.
Ms. Kravitz said she had a contract signed on a studio apartment, but the buyer, who was funding the purchase in part with money from her parents, called the following day to say they could no longer afford to buy.
Mauricio Umansky, co-founder of the Agency in Los Angeles, said he has a client in escrow on an approximately $10 million house who was planning to pay cash. Now, the buyer has asked to push the closing a few weeks so that he can get a loan to take advantage of the newly ultralow interest rates.
“He perceives that there will be opportunities in the stock market, and he wants dry powder,” Mr. Umansky said.
Deals are also stalling as a result of border closings and travel advisories. New York agent Danny Davis said he was slated to list a loft on Second Avenue this month but the owners, who had planned to come prepare the apartment for showings, live in Sweden and can’t travel to the U.S. right now. In Miami, Douglas Elliman agent Dina Goldentayer said she had two clients from Mexico City postpone their house-hunting trip to Miami last week.
‘This is uncharted territory,’ said Sherry Tobak of the Related Companies. ‘We somehow have to create the same urgency and excitement that a buyer would normally experience when they come through the sales office.’
In real estate, developers are likely to be among those hit by the crisis, according to people familiar with the market. In New York especially, where an oversupply of luxury condos has stymied prices over the past few years, developers, some of whom are already under pressure from their lenders to sell units, are now having to close their sales offices indefinitely.
After a smattering of parties to launch sales at their glitzy Park Avenue sales office late last month, the developers of the Waldorf Astoria condos are now battening down the hatches as the city has shut many businesses and banned gatherings of over 50 people. A spokeswoman for the project said the sales team has shifted to virtual appointments; they already had the technology in place to facilitate international buyers purchasing units sight-unseen.
Scott Avram of Lightstone, the developer behind a new condo project at 130 William Street in lower Manhattan, said their sales team is also now relying almost exclusively on virtual walk-through technology to show the property to prospective buyers. In the past week, they have still managed to sign four deals, including several based solely on virtual tours, he said.
“Certainly we’re concerned, but we’re reaching out to our brokers and customers and trying to keep things moving,” said Sherry Tobak of the Related Companies, which has also closed its condo sales offices across the city, including at mega-development Hudson Yards, in favor of conducting business virtually. “This is uncharted territory. We somehow have to create the same urgency and excitement that a buyer would normally experience when they come through the sales office.”
In resales, too, agents are turning to social media and online tools to market homes.
After their clients expressed discomfort about having strangers traipsing through their home, agents Heather T. Roy and Learka Bosnak of Douglas Elliman decided to hold a “live not open” house on Instagram and Facebook last weekend for a $2.399 million home in the Hollywood area of Los Angeles. For social media, they used the hashtags #businessnotasusual and #dontyoudarecomeheretoday.
After a few initial missteps—they were too close to the camera, and the camera work was wobbly—they were happy with how the virtual open house went. They said they aimed to keep the videos casual, joking with viewers that the toilet roll in the bathrooms was up for negotiation. Ultimately, their Facebook video got engagement from about 2,200 people, far more than would have attended an in-person open house.
“There were definitely four that were our parents, though,” Ms. Roy joked.
“Everybody has been trying to do more digital and virtual stuff anyway,” said Fredrik Eklund, an agent at Douglas Elliman and one of the stars of “Million Dollar Listing New York.” “This is going to be a catalyst.”
Some in the industry have been surprised that business hasn’t been more affected over the past couple of weeks. Mark McLaughlin, president of Compass California, said that on Sunday his firm received survey responses from 450 agents in both Northern and Southern California. On Sunday, about 10% of Northern California open houses were canceled. Only a relative handful of clients had opted to pull their listings by the beginning of this week, he said.
This weekend is slated to look different. Starting Tuesday, residents of San Francisco were required to leave their homes only for essential needs, like visiting a doctor or getting supplies.
Agents having the easiest time of it work in more remote areas. Jody Lovell of Highlands Sotheby’s International Realty closed on a $1.5 million deal in Highlands, N.C., an upscale vacation home destination in the Blue Ridge Mountains, on Monday. Mr. Graves, the New York agent, said it feels like summer in the Hamptons as New Yorkers head to their vacation homes, with lines of traffic at stoplights.
“Living in a more sparsely populated area, there’s less panic,” Ms. Lovell said.