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Advice for Tampa Bay home buyers and sellers in the time of the coronavirus

A St. Petersburg real estate broker on whether it's a good time to buy, and how a major factor unrelated to the pandemic is affecting the market.
Rachel Sartain Tenpenny is the CEO and Managing Broker of Keller Williams Realty St. Petersburg, Gulf Beaches and Seminole.
Rachel Sartain Tenpenny is the CEO and Managing Broker of Keller Williams Realty St. Petersburg, Gulf Beaches and Seminole. [ Courtesy of Rachel Sartain Tenpenny ]
Published Aug. 13, 2020

Whether it’s the coronavirus’ daily death toll or the record numbers of unemployment claims, there are plenty of reasons to feel uneasy about 2020 and its effects on the economy.

Yet at this same time, mortgage interest rates are at record lows, inspiring some millennials to consider buying a house for the first time. So is that a smart decision, and what should any home buyer expect when it comes to making such a big decision during a pandemic?

Rachel Sartain Tenpenny, CEO and managing broker of Keller Williams Realty St. Petersburg, Gulf Beaches and Seminole, provided her thoughts and advice, which have been edited for length and clarity:

Whether it’s unemployment numbers or coronavirus numbers, there’s just a lot of bad news this year. With all that in mind, for those who are financially stable, is it a good time to buy a house?

That's a trick question. It depends.

It depends on why are they buying. Has something changed in their family situation, are they having kids, did they get married, are they downsizing, do they need to upsize? With interest rate being in the 2 percents — we had a meeting earlier today and we had three different loan officers on the call. They said that these are the lowest rates in the history of mortgages. So it’s essentially free money. Why wouldn’t you take advantage of that?

With rent rates being so high, you could rent a one-bedroom downtown for the same amount on a monthly basis that you could pretty much own a $300,000 home.

So are you saying that for investment properties, it might not be as good of a time to buy?

For a smart investor that really does their homework it is, but in any of these types of situations you’ll see people just come out of the woodwork. Because the masses are buying, they think they should be investing. But we’ve seen a lot of investors over-improve properties and now they’re not appraising out.

The Tampa Bay market has the lowest number of homes on the market since at least 2010, if not longer. What’s going on?

I think it’s important that people understand that this is not COVID-related. It has been going on since the recession of 2008, where builders stopped building and slowly got back into new construction starts.

At the end of 2019, there were 2.6 buyers for every house in the community. So just think about three buyers for every single home. If you look at Tampa Bay, for single-family residential homes, there were 2,943 homes put on the market in June. There were 6,287 that went pending. It’s like, how is that even possible?

So you’re saying there hasn’t been as much home construction since the Great Recession?

Correct. But it’s at the point where millennials have become home-buying age.

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I would imagine that makes the market pretty competitive for buyers. What advice do you have for buyers to help make their offer stand out?

It is a very competitive market for buyers. We’re seeing four or five or six offers on good homes, 3-bedroom, 2-baths in the $250,000 to $325,000 range. It’s a feeding frenzy out there, honestly.

A couple of things to help a buyer stand out: Having a strong Realtor that understands the contract in the process is key. Making sure that they are pre-approved and sometimes lenders will actually do a full underwriting, so they’ve already reviewed the person’s income taxes and qualified them. Having a letter from the lender accompany the offer. Having a letter from the home buyer accompany the offer. Reducing inspection time-frames and things like that will help.

There’s a thing called an escalation clause that a lot of Realtors and buyers are using nowadays and it says that in a multiple-offer situation, that the buyer will pay up to X amount above the highest offer the seller receives.

Unfortunately, what sometimes happens is that they might go under contract at this escalated amount, but if it doesn’t appraise (at the same value as the escalated offer), everybody loses.

This is probably an easier time for sellers based on what you’re saying. But do you have any advice for sellers so they can feel confident knowing that they are accepting the best offer that they could?

There are two different contracts that are commonly used in our area. The one that is most often used is “as is.” The seller and buyers think that if the transaction is “as is” it’s going to be easier, but it actually creates more harm than good.

On an “as is” contract, during that inspection period, the buyer can walk for any reason under the sun. Whereas the standard sales agreement, if an inspection shows that structural, electrical or plumbing components are not in working condition, then the seller is obligated up to a predetermined amount to repair the home and the buyer still stays under contract. They can’t just walk.

For sellers, make sure the buyer is actually pre-approved, and ask them what industry they’re in. We’re seeing a lot of people who get under contract and then they’re losing their jobs.

The listing agent should be talking to the buyers’ lender, having a conversation, making sure it’s a good, strong, reputable lender that knows our marketplace. The type of contract that they’re using. What is the contract price? What are the comparables? Is it going to appraise out? These are just some of the things that the seller should take into consideration.

The home-buying process has been affected by the pandemic. What are some of the new standard operating procedures that people should expect?

We’re wearing masks and using hand sanitizer. A lot of times, sellers are not going to be at the home when the buyers are seeing it.

Viewing it online via video before going out to see the home — a lot of Realtors are doing more virtual tours and 3D tours to enhance that experience for the buyer so they can ensure that it is the home they want to see (in person).

For buyers, make sure you drive by the home, that you like the neighborhood, you like the curb appeal, before scheduling to get in. Not having papers during open houses, sharing mobile apps instead, having electronic sign-in versus a piece of paper. These are some of the things that we’ve had to switch to.

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