Do All Home-Purchase Contracts Need A ‘Covid Clause’?
The world of real estate buying and selling may never be the same after the year of the virus.
Virtually all purchasers now rely on digital photos and videos to tour for-sale properties, both buyers and sellers are required to wear masks during face-to-face negotiations, and closings have become a drive-by affair.
Many brokers are utilizing “curbside closings” which are held at satellite offices and in parking lots of title companies. The home buyer or seller (or both) stays in his or her automobile and a title company messenger carries the closing papers from the office to the car. The party has about 10 minutes to sign the papers and the messenger returns to pick them up and deliver them to the closer.
However, when it comes to signing a contract in the era of COVID-19, many real estate agents now are responding to uncertainty by adding a “COVID clause” to home purchase contracts.
Officially known as a “coronavirus addendum,” the clause adds extra security by protecting both sides of the transaction in the event they are impacted by the pandemic.
For example, what happens if one party loses their job and has to exit the contract before closing? How will the buyer and seller be protected?
A COVID clause also allows for timeline flexibility. A real estate transaction is a complex process that involves many parties, and now, more than ever, delays can occur.
Delays can take place in the lending and appraisal process, during home inspections, while required repairs are made and at the closing, experts say.
So, buyers and sellers need to discuss any addendum with their agent and their real estate lawyer before adding to the contract.
“Every situation is different and needs to be handled as such,” warned Hasani Steele, CEO of Chicago-based RE/MAX Premier. “While templates are available, you should not use a cookie-cutter clause.”
Mortgage rates hit another record low
On June 18th, Freddie Mac’s Primary Mortgage Market Survey reported that 30-year fixed-rate mortgages nationwide averaged 3.13%, the lowest level in the survey’s history which dates back to 1971.
The benchmark rate plummetted from an average of 3.21% a week earlier. A year ago, the 30-year fixed home loans averaged 3.84%.
This means Chicago home buyers and families seeking to refinance now have a once-in-a-lifetime opportunity to lock in the lowest mortgage interest in nearly five decades.
“While the rebound in the economy is uneven, one segment that is exhibiting strength is the housing market,” noted Sam Khater, Freddie Mac’s Chief Economist. “Purchase demand activity is up more than 20% from a year ago, the highest since January of 2009.”
With mortgage rates falling to another record low due to declining inflationary pressures, many would-be home purchasers in “the buying mood,” Khater said.
“However, it likely will be difficult to sustain the momentum in demand,” Khater said.
“Unsold inventory was at near record lows coming into the pandemic and it has only dropped since then.”
Rent payments reach 80.8%
On time apartment rent payments in the U.S. reached 80.8% as of June 6th, up from 80.2% a month earlier, reported the National Multifamily Housing Council. The survey covers 11.5 million professionally managed rental units nationwide.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.