Virtual Home Buying

Speaker 1: [0:09] Hello, hello, and welcome to the Awesome in Seattle podcast, quarantine edition. We are, uh, all in separate locations. The audio quality probably won't be as good as normal, but we're doing our best, as I'm sure you're used to at this point in time. Um, so today we are talking all about virtual buying and how to do it, uh, virtual buying in terms of houses, uh, how to do it, and, uh, and really how to do it safely. So that's what today's episode is all about. My name is Christian Nossum with the Awesome Nossum Group here in Seattle, and I am joined by three amazing real estate agents on the Awesome Nossum Group. We have Charlotte Reynolds.

Speaker 2: [0:54] Hello.

Speaker 1: [0:55] Sara Kate Davis.

Speaker 2: [0:58] Also hello.

Speaker 1: [1:00] And then as always, Jason Saldarriaga. Hello. So again, we are four real estate agents here in the Seattle area. Uh, we all work for the Awesome Nossum Group at Wilson Realty Exchange, and we love to explain how to do things, and that's, uh, our whole spiel is educating home buyers and sellers in the real estate land. So, um, hope everyone is well and staying home, and, uh, washing their hands and not touching their face, and, you know, all the normal stuff. Um, let's talk about buying. Let's talk about how we're doing it, how it's actually working, if people are actually doing it right now. Uh, Charlotte, you wanna talk a little about this?

Speaker 3: [1:47] Yeah. So it's definitely still possible to buy and sell a house right now, um, which is good. When Governor Inslee first did the stay-at-home order, we were not classified as an essential business, and then about a week later, um, he modified that to where real estate is now considered essential. Um, so that's good for you guys as buyers and sellers. It's good for us because it means we still have jobs, so that's exciting. Um, so, you know, there's a lot that goes into either buying or selling and f- you know, starting out with consultations on how to make a plan, so that's obviously easy to do now, uh, virtually. You know, there's FaceTime. We have Zoom, Google Hangouts, and all that stuff. Um, so that makes it really easy. And, you know, a lot of mortgage brokers, uh, do everything, you know, in terms of applications online anyways. So on the banking side of things, not much really has changed in terms of how you're gonna do the, the application. So that's kinda seamless for you. Um-

Speaker 2: [2:50] Yeah … Speaker 3: and then, you know, the biggest thing that, that people are kinda concerned about is how do we show houses in person? You know, while we're considered essential, there still are restrictions on showing homes and, you know, um- Complying with that, you know, staying six feet apart and social distancing. A lot of homes are supplying, you know, Clorox wipes, hand sanitizers, and even some of the listings are requiring, uh, you know, tours to be equipped with masks and gloves and things like that. So I know that I've been showing homes, and Sarah Kate has as well. So Sarah Kate, I would love to get- Indeed … your input on what you've experienced. I've experienced very similar things to you, just listing agents really trying to protect their listing and protect everyone that's coming in and out of the property, providing gloves, providing hand wash, paper towels, you know, sanitizing Clorox wipes, uh, and just kind of having really strict showing instructions. I've also seen, uh, with some Windermere agents, they have a new form that they're having people fill out before we tour, that basically just says you haven't been experiencing any flu-like symptoms, and kind of just signing your name and having that kind of protection and assurance that no one ill is entering their listing, so.

Speaker 3: [4:13] Okay. Interesting. Interesting.

Speaker 2: [4:15] Yeah.

Speaker 3: [4:15] Yeah. The other thing too that we've been trying to do is kind of minimize the amount of properties that we're taking clients to, and we're doing that by, you know, having them do neighborhood drive-bys to make sure that, like, the, they like the neighborhood before, you know, going in to see the home, or making sure to review, uh, seller-procured pre-inspections, you know, if it's available, to make sure there's nothing wrong with the house before we go and see it. So we're trilly, really trying to minimize the number of houses that we're taking people in to. Yeah. You know, that they might not be super serious about moving forward with.

Speaker 2: [4:52] We had a little team meeting this morning, and Christian was saying a really good way to kind of gauge interest as well is looking at showing time, which we now have to use to schedule all of our showings, and it's an appointment system. And you can gauge the interest on the house by how booked up the showing times are. So-

Speaker 1: [5:11] Mm-hmm … Speaker 2: that's another good way to kind of curb expectation a little bit. Like, if someone's not quite ready to get into a bidding war and that kind of scares them, or, you know, they were, like, kinda so-so on the property and that kind of steers them away a bit, or, you know. There's lots of, lots of reasons to kind of check that out to gauge interest, so. Yep. Uh, some of the rules too that Inslee, Governor Inslee, put into place, uh, one of the big ones that's affecting home tours is there are only two people allowed in the house at a time, and one of those two people has to be us. One of them has to be the real estate agent, real estate broker. Uh, so if you're a couple looking or a family looking, um, n- only one person can be in the house with us at a time. We have to stay six feet apart. Um, and you know, all the normal social distancing rules apply. So that's, uh, that's really the biggest restriction that's kinda hindering us, but not really hindering. It's not that big a deal. You just each look at it one at a time. The other person stands in the front yard and waits to enter the house. Um, where that is a little different than normal is for the home inspection So since only two people can be in there, and one of them has to be us, uh, the other person would be the home inspector. So that means that buyers are not allowed to walk around and ask questions, uh, when the home inspector is in there, because an agent has to be present the entire time. So what we're having our clients do is just come at the end of the inspection and chat things over with the inspector in the front yard, standing at least six feet apart, um, and, and really getting their questions answered that way. And if they have questions about something specific in the house or if the inspector saw something, they can just walk in with us, go look at it. Um, if we need to, we can be on the phone with the inspector so they c- or even FaceTime or whatever with the inspector so they can show us exactly what they found. Uh, so we can still get it done. Um, it's just there's some more restrictions in place. So the thing that we've been saying all around, be flexible, be nimble. Things are changing. Um, we just gotta stay flexible. It's, uh, it's an interesting time to all be alive. So and hopefully everyone is staying safe. Um, what are you guys seeing in the actual market, like, uh, from, from offer standpoint and stuff like that, and listings on the market? Do we have any sort of data to judge, like, is the bubble… Is there a bubble, and is it bursting? Is, is this gonna be, like, a horrible recession or anything like that-

Speaker 4: [7:54] Yeah … Speaker: that's gonna affect housing? Yeah. So we're, we're, we are recording this in mid-April right now, and uh, unfortunately our data is from the MLS generally, like a month behind.

Speaker 1: [8:07] Mm-hmm.

Speaker 4: [8:08] Um, so right now we don't have much data that really, uh, covers the time period since the pandemic in the US really broke out. Um, we should have more information in, uh, May to really look at. That said, we can definitely speak anecdotally on what we're seeing and- Yeah … with clients and that sort of thing. And, and, uh, the market is definitely still alive here in Seattle. We're very fortunate. Good. Uh, there are definitely buyers out there. Um, I will say just looking at, like, my searches with various clients and stuff, there are significantly fewer listings on the market, which makes sense. There's a huge increase in the amount of listings that were taken off market temporarily. So people who listed their house in February and then things blew up with the pandemic, a lot of them decided, you know what? Let's take my house off the market for now. First off, it might not sell. Uh, we might not be able to sell it depending on what the governor rules. Um, but also I wanna protect my family or whatever it may be. You know, they have reasons, logical reasons, and so you see a lot of temporarily off-market houses.

Speaker 1: [9:19] Yeah, I know… I mean, talking with you guys every day at our meetings, uh, virtual meetings of course, uh, there's some houses that you literally can't get an appointment for three days. The house is so busy, uh, which is crazy. I don't, in my 15 plus years, I've never heard of that happening. Uh, partly because we didn't have to always have appointments, uh, to see a house, and you could overlap showings. So that's probably the big reason why. Right. But also, I've never had it where it was that busy at any specific house. Like, that's just crazy. So, um, there's definitely a lot of buyer interest out there still. Sellers, if you're considering selling, this is still not a bad time. This is a good time. Um, there's still a lot of buyers out there. Uh, that said, there are some, some lending things that are on the horizon that might change who can qualify, uh, and one of those has to do with credit score changes. Uh, anybody wanna speak on that?

Speaker 4: [10:24] I can speak to that. Sure. Uh, I love this stuff. Credit score, just so you know, like, uh, we work, uh, we give home buying classes, and a lot of times it's, uh, in- we have a lender on hand. Generally, it's Dan Keller at Cross Country. He's exceptional with his knowledge on really all things financing, and even investments in general. And, uh, he really exposed me to, I guess, what you could call the game of credit scores. Mm-hmm. Because it is a game. For sure. If you really wanna, if you wanna get into this, you know, you can re- basically read the rules, do this, and your credit will go… This will happen to your credit score. Do this, and, you know. And, uh, he- I bit that fruit, and now I'm addicted to that game. To say the least. So I love this stuff. Uh, but my, uh, but my understanding of this is a little, uh, weak, but my, what I understand it to be, basically, every few years, FICO, we've probably all heard it, FICO is like a, an organization that manages credit scores, that, that creates them. Um, and each, there's tons of different credit scores. If you buy a car, uh, the bank will use a different credit score versus, uh, if you buy a house, and the reason for that is the bank is looking for different things based off of what you're trying to get a loan for, right? So, like, buying a car, uh, might not require as long term of a vision as a house, where the bank wants to make sure you have a really stable job. Because if you default on this house, uh, it's a much larger financial burden for the bank than a car or something like that. Mm-hmm. So each, like, FICO has multiple scoring systems, and they're numbered, and the last one was FICO 9, and it was released in 2014, I believe. So FICO 10 was released, I believe in January or February of this year, and they adjusted some of the calculation, like the algorithm in terms of how they calculate the score, like they always do. This time, they're accounting for personal debt differently than they have in the past. In the past, if you had a credit card debt, credit card debt, not credit car debt. Credit card debt, and you, uh, got a personal loan to pay that debt off, generally, you would see your credit score go up. Um, there's been a huge rise in people doing that, and so the industry has to- Respond to that because it impacts, um, their underwriting and all that stuff. And so FICO 10 takes that into account and will look up to, I believe, the last two years to see if you pulled a… If you cr- got a loan and, you know, where that money went basically. Like, was it used to pay off your debt? Well, you, you basically moved money from one hand to the other. You didn't really do much other than moving debt around.

Speaker 1: [13:25] Yeah, you didn't eliminate the debt- Correct … you just replaced it with new debt that maybe was le- less expensive, but still debt nonetheless.

Speaker 4: [13:32] So my whole spiel, what this means to you as a consumer is if you look at your credit score, maybe you pull it once a year, um, we're talking about FICO scores, by the way, not like- There's tons- tons of different credit scores … Speaker: Credit Karma and stuff like that. That's not the same for… Like, that's not the same score as what they use for getting you, uh, approved for a house. Correct. Uh, banks use FICO for that, for house- Mm-hmm … loans and stuff. Mm-hmm. But the FICO scores for every, uh, news article's a little different here, but it looks like a roughly half of the country, their credit scores will go up, and half of the country, their credit scores will go down slightly. And it could be, you know, five to 10 points. It shouldn't be a huge impact. It shouldn't make a huge impact on most people, knock on wood Um, but yeah, you might see if you, you keep up with credit sc- your credit score, you might see some slight changes based on if they're using FICO 9 or FICO 10 now. So-

Speaker 1: [14:33] Yeah. And I've, I've heard from Dan Keller at CrossCountry, who we mentioned earlier, um, some people might see like massive increases or decreases in their credit score, like 40 to 60 point differences, uh, depending on, on what the factors are that are being put into place. And, um, some banks, uh, were not totally clear on this 'cause it's, uh, pretty new in terms of credit scores. Uh, some banks are not implementing that, that s- this new score, uh, until this summer. So, um, you might be able to get by with using your current credit score for the time being, but once summer hits, um, that's when we've kinda heard that's going to be put into place and those changes are gonna m- happen. And, um, it, it might be better to do something sooner than later just because from what we have heard, some rumors are it's going to impact more people, uh, negatively than necessarily positively. So-

Speaker 4: [15:32] Yeah. And it, it appears that the people who will be negatively impacted generally are the ones that are the people who already have bad credit scores. So it's k-

Speaker 1: [15:40] Uh,

Speaker 4: [15:40] got it … kind of difficult for them because- Yeah … b- but it, I mean, the industry is always trying to respond to the market, you know, how much money is there and cons- Mm-hmm … uh, consumer debt, where is consumer debt? So they understand their risks when they're giving loans and all that stuff. And if now all of a sudden tons of people have these, um, personal loans to kind of shield from these credit card debts and stuff, the banks are saying now, "Well, it's, to us it's very similar."

Speaker 1: [16:11] Yeah.

Speaker 4: [16:12] You know? So.

Speaker 1: [16:13] Yep. So I guess stay tuned. We'll, we'll get more info as it's released on this, but, uh, just wanna put that on your radar as something that might be happening here in the, in the future that could impact you. Um, l- let's talk about recessions, because obviously the economy's going through some issues with coronavirus right now. Um, I just saw this morning that Amazon stock's at an all-time high. Uh, so the Seattle area will probably be impacted nicely because of that, because there's a lot of Amazon employees, especially that buy houses. So, um, that's kinda interesting, but then there's other parts of the economy that aren't doing well, obviously. So, uh, in a recession, uh, and a lot of people, we've talked about this before and we talk about this in our class as well, but in a recession What we're kind of all, especially if you're under 40 years old, uh, you're kind of all blinded by the last recession we had, which was due to housing, and that was in obviously 2008. Um, we're all kind of scarred by that because housing prices dropped dramatically. Uh, the thing to realize though, and we actually ran the numbers on this ourselves, and by we, I mean Jason ran the numbers on this 'cause he's our resident data guy. Uh, and, and he… When we saw this headline, and I'll, I'll… Maybe I'll let you tell the story better, Jason, 'cause you're, you're better at telling it. You talk about it or speak to it at the classes. Yeah. So I'll just go into this. I have a whole spiel.

Speaker 4: [17:44] I have a whole

Speaker 1: [17:44] thing. Yeah.

Speaker 4: [17:45] It's like, uh so yeah, so a few months ago, a lot of real estate agents, I just… We all started seeing all these, um, I think it was Christian that first saw them, but there were all these articles being shared by real estate a- agents about, I think the, I think the topic was, um, the, or the title of the article was something like, um recessions don't impact home prices.

Speaker 1: [18:10] Mm-hmm.

Speaker 4: [18:11] And I see this and I'm like, "What? What?" Yeah, exactly. That's ridiculous. Like, come on. You know, you're, you are gaslighting or something. Mm-hmm. Like, what is happening here? Um, and so I looked into it, and the f- the first thing I see is that the study was, uh, funded by, I think it was Redfin or Zillow, I believe. So that was a great sign that it wasn't-

Speaker 1: [18:34] It

Speaker 4: [18:34] was- … manipulated.

Speaker 1: [18:35] Exactly. It was-

Speaker 4: [18:37] Um-

Speaker 1: [18:37] It was, uh, yeah. Yeah.

Speaker 4: [18:39] It was

Speaker 1: [18:39] definitely… We thought it was definitely manipulated, and not a very good headline, not accurate.

Speaker 4: [18:43] Exactly. So I pulled the data. So ba- the gist of the articles that were being widely dispersed- Pushed yeah.

Speaker 1: [18:56] Yeah … Speaker 4: um, was basically, look, you might think that, uh, recessions impact home prices, but looking back in history, they generally don't. And I just, again, I felt like that was clearly false. So I pulled the data, and in a nutshell, to put it simply, it seems pretty accurate. So if you look on the last five national recessions, um, this goes back to like 1980. We've had about five national recessions since then, not counting the current one. Um, two out of the five saw home prices decrease at the end of that recession, okay? Three out of the five, by the time the recession was over, which most recessions only last six months to a year generally, knock on wood. Yeah. Um, home prices have rebounded. Um, the two that they didn't rebound, one was after the Cold War, uh, in 1991. There was a slight national recession after that. GDP was down 1.4%. Home prices were down 1.9%, um, after the end of that. But they recovered very quickly, like within that year. In 1991 they recovered The other one was obviously the, what you were saying, Christian, the- Yeah the Great Recession. The one that scarred us all.

Speaker 4: [20:11] Yep. And this one was a huge, uh, recession in terms of home prices. It really impacted it. GDP was down 5.1%, but home prices were down almost 14%. And it took a long time, um, and we've discussed this at length on this podcast, some areas have still yet to recover from it. It took a long time for a lot of areas to recover. Se- Seattle was very, uh, s- good as- Yeah … compared to the national average. We've, we've

Speaker 1: [20:41] definitely recovered,

Speaker 4: [20:42] and

Speaker 1: [20:42] often doubled if not more.

Speaker 4: [20:44] And so then the question is, okay, well th- that's kinda shocking. So, uh, recession, home prices generally don't decrease by the time the recession's over. They've, they've rebounded. Um, so where do I get the idea that that's not the case? And most likely what people are thinking is, first of all, while home prices might not decrease, money does tighten during recessions. Mm-hmm. So it might be, a- and it will be harder to buy or sell a house. Money's tight. People- Yep … it's harder to get a loan generally a lot of times. It's, people are, it's harder to buy a house. Um, jobs are up in the air, that sort of thing. And also, while home prices might not decrease so much, they definitely stagnate generally during recessions. Um, home prices are not as elastic as most people think. People have to own a house. They have to live somewhere, and either a landlord owns it or the, uh, the occupant owns it. One or the other, right? Generally speaking. And, uh, and so they're slightly less elastic, um, than something like consumer goods, um, or like stuff like cars, where you see w- wide swings based on recessions.

Speaker 1: [21:54] Yeah. So I guess the basic, the gist of that was out of the last five recessions, only two of those have been impacted by housing, or housing has only been impacted by two of those. One of those was a small impact, 1.9%, and it, it rebounded within a year. The other was 2008, uh, and that was caused by housing. Yeah. So it was just, it was because it was so simple. The rules to get a mortgage were basically nonexistent. I mean, they're just stupid.

Speaker 4: [22:25] Yep. And that recession, that is the only recession in US history that was caused by housing. Every other recession has been caused by something else, a war- Yep … or, uh, a, an embargo or something of, you

Speaker 1: [22:39] know.

Speaker 4: [22:39] Like that, that sort of thing.

Speaker 1: [22:40] Yeah. So do we expect housing to be impacted by the current coronavirus pandemic? Uh, maybe, maybe, maybe. I don't know. We don't know. We'll just have to wait and see. I mean, we know that it is, and it has been hard to get a loan. It's definitely not easy to get a loan. Um, you have to go through a lot of hoops. You have to verify every dollar. Uh, I mean, it's, it's not easy necessarily to get a, uh, a mortgage, and it hasn't been. And banks right now even are tightening up their credit standards. Uh, I saw an article yesterday saying that Chase Bank, who obviously is one of the big ones, um, they are requiring a lot of… Like, their, their, their credit standards to get a, a mortgage are super tight right now, um, because they just wanna protect, uh, their, themselves. Which again, in 2008 that was, it was nonexistent. They were lending left and right. So, um, so I think banks are taking notice they don't want to have what happened in 2008 to happen again. Um, it's still hard and it's getting harder to get a home loan. You actually have to be able to afford it, which is good, uh, in terms of not seeing another housing crisis. So, uh, I think long-term we're not gonna be seeing another 2008 again. I don't think we're gonna see, at least in the Seattle market, we're not gonna see some dramatic drop in home prices, um, at least with what's going on currently. Uh, if things continue for years, then I think that's gonna impact the whole entire world, and that's a different story. Mm-hmm.

Speaker 4: [24:25] But- Yeah, the way, the way I'm, I'm advising my clients is, you know, uh, some clients of mine, now is n- not a good time to buy because their jobs are up in the air. Mm-hmm. Their stability is weakened. The clients of mine who have stable jobs and have, uh, money saved up and know what they want, and there's stability there with their long-term planning and that sort of thing, now might be a great time to buy.

Speaker 1: [24:50] Yeah.

Speaker 4: [24:50] Um, because there's o- there's definitely opportunity out there. That said, there are a lot of houses on the market, and you look at the showing time, like we were saying before, where you, you schedule the appointment. The appointment. Yeah. And they are booked for, like solid even past- Yep … the point where they're reviewing offers. Yep. And so it's like, well, there's no chance of them even s- even seeing this house, so. But other houses are sitting for weeks or- Yeah … being taken off the market, so.

Speaker 1: [25:16] And again, it all boils down to what we say all the time. If it's priced right, if it's in a good location, and it looks good online, it's, it's probably gonna sell. Exactly. And it's gonna sell rather quickly. But if you overprice or it doesn't look great online or the house has some major issues, uh, and you didn't price that in, that's when they're gonna sit, so. Um, let us know. I mean, I think that's all for today. Anybody else have anything they wanna, they wanna add?

Speaker 2: [25:46] No, you guys did a great job. Oh.

Speaker 1: [25:51] I feel, I feel like the beginning was all you, was Sarah Kate and Charlotte- It was ladies and gentlemen … and then the second half… Yeah, exactly. We just took turns, so. Um, so yeah, I, I think that's all we got. Let us know what we can do to help you. We, obviously, we can do pretty much anything virtually right now. We're

Speaker 2: [26:07] here.

Speaker 1: [26:08] Uh, yes.

Speaker 2: [26:08] I'm not virtual. Charlotte's not virtual. We're, we're out in the wild.

Speaker 1: [26:13] Well, those two are, are definitely seeing homes and stuff. But, I mean, if you wanna have a consultation, um, or just talk about what options are out there, uh, w- we are obviously here to help, and we can do that. Um, I've heard of some people actually signing their, like, closing documents at parks, like on a park bench, 'cause they have to meet a mobile notary, meaning someone that has to actually meet them in person since there's not a lot of coffee shops or restaurants that we can go into anymore, and- Watch out, you'll make it

Speaker 2: [26:41] a fine.

Speaker 1: [26:42] Yeah, I know. Watch out. Depending on if the park's closed or not. So yeah, let us know what we can do to help you. If you are someone that does not want to leave your house, but you still want to look at houses, we can definitely accommodate that. We can do virtual tours, where we'll walk through the house and FaceTime or s- Zoom call you, or whatever we need to do. Um, and as we have always done, we are never gonna talk you into buying a house, but we will often talk you out of buying a house. That's, that's always been our jam. So, uh, if we see red flags, we will note those, we will tell you about those, and, um, and we will, you know… W- Again, we're not gonna talk you into buying something, so if you're not there in person, we're gonna ch- point out all the, all the potential issues and red flags. So, um, don't be worried that you're gonna be sold, 'cause that's not anything we have ever done. That's not how you get repeat and referral business, and we all four believe that this is a long-term, uh, relationship with you. So we're never gonna screw you over. Uh, we want you to do the right thing. So- Yeah. Speaking of, like, a good example is just over this last week, I've had four past clients reach out out of the blue and say, "Hey, we're ready to either sell our current place and move up to our next house," or, "Hey, I'm thinking of potentially selling this investment property I've had for years and years. Um, what do you wanna do?" Or, "What do you th- what do you recommend right now?" And again, you don't… It's, I'm just, I'm saying this to show you that you don't get those types of calls from people out of the blue if you've screwed them over when they bought, and we're never gonna do that to you. So, um, just throwing that out there. On that note, uh, please stay safe. Do your best to cover your face, cover your cough. Don't sneeze on people. Thank you, everyone, and thank you, you four, uh, for, for joining on the podcast.

Speaker 2: [28:38] Right on. All righty. Bye, friends.

Speaker 1: [28:41] Bye.

Speaker 2: [28:41] Bye. Bye.