How Coronavirus killed my real estate deal...

Fred (not his real name) is under contract to purchase a home I have on market.  He's been under contract for some 30 days.  Once we rolled into our present Coronavirus crisis, and about 10 days away from closing Fred says, "I don't want it".  It's noteworthy that the loan commitment has already been shared to all parties and EVERYTHING is ready to go for closing.  Subsequently, if Fred cancels now he's risking the loss of his $20,000 escrow deposit.  Sellers have yet to decide if they'll go after it.  Fred's logic is that since these are extraordinary circumstances, he should not have to forfeit his deposit for cancelling the purchase.  And while I can certainly agree that these are extraordinary times, that may not necessarily allow Fred to punch out unscathed.  The contract does have a provision for so called "acts of God" like hurricanes, yet I don't think that the Florida Bar Association had Coronavirus in mind. As both Fred and the Seller have their own respective attorneys, I'll let them hash it out.

Whenever we’re considering bringing a home to market, it’s worth taking note of the overall local and national socio economic conditions, and how those factors could potentially effect consumer behavior.  I make it a point to continually keep tabs on what people are reading so as to be able to intelligently address buyer objections.  The question has come up in recent weeks about what the Coronavirus could do to real estate markets.  Fact is, no one really knows.  Commodity markets, of which real estate certainly is, do not like uncertainty.  We’re seeing the effect of such on the stock market.  Real estate markets will take longer to react, if at all, because it’s not an investment that you can quickly get in or out of such as stocks of bonds.  As the ten year treasury note is seeing historically low yields, and since mortgage rates tend to mirror the ten year note, both new mortgages and refinancing rates are presently near historic lows.  This bodes well for the prospective buyer pool and it could yield a spike in home sales in the short term.

 

Here’s one take on the Coronavirus situation: https://www.fool.com/millionacres/real-estate-market/articles/how-the-coronavirus-could-impact-the-american-real-estate-market/

 

And that’s what’s on my mind today….