Virginia REALTORS® is committed to keeping YOU in-the-know with updates and resources regarding the impact of the coronavirus disease (COVID-19) on your business and industry. Keep checking back—this page will be updated regularly with new information.
Important Updates At a Glance
- Families First Coronavirus Response Act, which goes into effect on April 2nd, provides guidance and assistance for emergency family and medical leave, emergency paid sick leave, and emergency unemployment.
- NAR - COVID-19 Emergency Legislation
- Impact of COVID-19 Response Act to NAR Members
COVID-19 & Real Estate
Financial Assistance, Loans & Federal Stimulus FAQ – ADDED 3/27/20
The Federal government is making assistance available to individual workers, families and businesses to help mitigate the economic and financial impacts of COVID-19. Details of some of these programs are still to be determined. We will update this page with more information as it becomes available.
Q. What financial assistance is available to me if my income has been impacted by COVID-19?
A. On March 25, the U.S. Senate passed a $2.2 trillion stimulus package designed to help individuals, families and businesses impacted by COVID-19. Details still need to be published about some of the programs; however, there are two key benefits included in the stimulus that benefit individuals and families. (Additional measures provide assistance to small businesses – see more below.)
- Direct payments to Americans. Every adult with an annual income of less than $75,000 will receive $1,200, and families with children will receive an additional $500 per child. These payments will scale down for those with incomes above $75,000, phasing out entirely at $99,000 for individuals and $198,000 for married couples. Payments likely will be delivered to U.S. households in early April.
- Expansion of unemployment benefits. Unemployment benefits have been extended by 13 weeks. (Current unemployment benefits last for between 12 and 26 weeks in Virginia.) The stimulus package also includes an extra $600 per month for four months. The Virginia Employment Commission has information on filing claims for unemployment benefits on its website.
- Importantly, the unemployment benefits included in the stimulus package apply to independent contractors, which includes many real estate professionals, as well as workers who are furloughed, gig workers, and freelancers. The U.S. Department of Labor will publish guidance about the mechanics for qualifying for unemployment benefits as an independent contractor.
- The $2.2 Trillion stimulus package includes a number of other initiatives. See NAR for more information.
Q. What assistance is available to small business owners or sole proprietors that are negatively impacted by COVID-19?
A. A small business owner can apply for loans through the U.S. Small Business Administration’s 7(a) loan program, which is the SBA’s primary program for providing financial assistance to small businesses. The stimulus package bill includes $350 billion for loans to small businesses through the 7(a) loan program. Eligible businesses can get up to $10 million toward mortgage interest, rents, utilities, and payroll costs. A portion of these loans may be forgivable. The National Association of REALTORS® has information about the 7(a) loan program.
The SBA also has established the Economic Injury Disaster Loan Assistance (EIDLA) program specifically to assist small businesses impacted by COVID-19. The EIDLA program provides small businesses with working capital, low-interest loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing as a result of COVID-19. The EIDLA application is available on the SBA’s website.
Q. Is my business eligible for the SBA’s Economic Injury Disaster Loan?
A. If your business has 500 or fewer employees and your business has been impacted by COVID-19, you may be eligible. Loans are available for sole proprietors, corporations, partnerships, non-profits, Limited Partnerships, Trusts, and Limited Liability Entities. Examples of Sole Proprietorships include individuals with rental properties, home-based businesses, and self-employed trades. EIDLs are for working capital which includes fixed debts, payroll, accounts payable, and other bills that cannot be paid due to the disaster’s impact. It does not cover lost sales.
The Virginia Small Business Development Center (SBDC) has a step-by-step walkthrough of the application process.
Q. As a business owner, are there benefits I need to offer to my employees as a result of Federal legislation?
A. On March 18, the U.S. Congress passed the Families First Coronavirus Response Act (FFCRA), which requires certain employers to provide employer-paid sick time and expands the Family Medical Leave Act (FMLA) for employees who are impacted by COVID-19 or caring for family members who are impacted by COVID-19.
Q. Is my firm covered by the FFCRA?
A. The FFCRA covers all private employers with fewer than 500 employees; however, small businesses with fewer than 50 employees may qualify for an exemption from the requirement to provide paid leave due to school closings or unavailability of childcare, if the leave requirements would jeopardize the viability of the business. More information can be found on the U.S. Department of Labor’s website and the National Association of REALTORS® website.
Q. Are independent contractors entitled to paid leave?
A. Self-employed individuals (independent contractors) may be eligible for paid leave administered through refundable tax credits. More information can be found on the National Association of REALTORS® website.
Q. What do I need to know if I own a multifamily rental property?
A. The Federal Housing Finance Agency (FHFA) has issued guidance allowing lenders to grant forbearance to borrowers with multifamily properties financed by Fannie Mae for up to three months. As part of the forbearance plan, borrowers must agree to suspend evictions of tenants who are facing financial hardship due to the COVID-19 crisis. Fannie Mae’s website has information about the multifamily forbearance program, though mortgage holders will need to contact their individual lenders directly.
Q. What if I am having trouble making my own mortgage payment?
A. On March 18, FHFA directed Fannie Mae and Freddie Mac to suspend foreclosures and evictions for single-family homeowners for at least 60 days due to the COVID-19 emergency. The foreclosure and eviction suspension applies to homeowners with a mortgage backed by Fannie Mae or Freddie Mac.
Earlier in March, FHFA announced that Fannie Mae and Freddie Mac would provide payment forbearance to borrowers impacted by COVID-19. Forbearance allows for a mortgage payment to be suspended for up to 12 months due to hardship caused by COVID-19. Borrowers should contact their lender directly for more information on forbearance options.
Q. Do you have clients that participate in USDA-backed single-family and multi-family programs?
A. If so, please check out this comprehensive document from the USDA Rural Development office on the immediate actions they have taken to help rural residents, businesses, and communities affected by the COVID-19 outbreak.
Mortgage Rates FAQs – UPDATED 3/27/20
On March 15th, 2020, in response to the rapid spread of the coronavirus (COVID-19), the Federal Reserve Bank announced it is cutting the federal funds rate to 0%. Shortly thereafter, Virginia REALTORS® began receiving questions about how this will impact mortgage rates and how REALTORS® should be advising their clients. Below, please find answers to your questions from Virginia REALTORS® Chief Economist, Lisa Sturtevant, PhD.
Q. Why are mortgage rates bouncing around so much?
A. The average rate on a 30-year fixed rate mortgage fell to 3.50% for the week ending March 27, down from 3.65% a week ago but higher than in the first part of March.
The measures that are typically correlated with mortgage rates—namely the 10-year Treasury yield—are becoming less helpful for forecasting where rates will go. There is a lot more variation in the market, with rates varying from lender to lender, depending on capacity to handle applications.
Q. What do the volatile mortgage rates mean for buyers?
A. It is more difficult now to predict which direction mortgage rates are heading. In addition, locking in a mortgage rate is more complicated than it was last month, as lenders are increasingly asking for loan approvals and appraisals to lock in.
Q. I heard the Federal Reserve dropped the federal funds rate. Is this the same thing as the mortgage rate?
A. The federal funds rate, which is controlled by the Federal Reserve and is a very short-term interest rate, is not directly tied to mortgage rates. This rate is the interest rate at which banks and other financial institutions lend money to each other, usually overnight. The 30-year fixed mortgage rate is more directly impacted by long-term factors, such as 10-year and 30-year Treasury yields. Mortgage rates are also determined by other factors, including the inflation rate, the pace of job creation, and whether the economy is growing or shrinking.
Therefore, while mortgage rates and the federal funds rate sometimes move in tandem, and the lower fed rate will eventually impact longer-term interest rates, it is not always possible to predict how a federal funds rate cut will impact 30-year mortgage rates in the near-term.
Q. What does all of this mean for homeowners and buyers? Are mortgage rates going to decline?
A. Mortgage rates will probably either stabilize or continue to decline in the near-term. The action by the Federal Reserve to purchase billions of dollars in mortgage-backed securities (MBS) will help stabilize and likely lower mortgage rates.
However, there is a big constraint in terms of lender capacity to service loan applications. Lenders are facing a pipeline of applications—mostly refinance applications—and some lenders are raising rates to slow the number of people applying for home loans, giving them time to work through the backlog.
Q. Assuming mortgage rates do stay low or even fall further, what will be the impact on the housing market?
A. Low and falling mortgage rates tend to be positive for the housing market, making it relatively less expensive to borrow for a home purchase. However, the relationship between home sales and mortgage rates has been atypical over recent months. Rates have been so low for so long, which means that the cost of borrowing is not what is keeping potential home buyers out of the market. Rather, an insufficient supply of inventory has had a bigger impact on the housing market than mortgage rates. In fact, the falling mortgage rates in recent weeks have spurred unprecedented levels of refinancing activity, not home purchase activity. Increased refinancing activity could actually make it harder for would-be home buyers as more homeowners decide to keep their homes off the market.
Q. What should I tell clients about mortgage rates?
A. While it is likely that rates will fall further in the coming weeks, a drop is not a foregone conclusion. There may be little value in advising clients to wait to purchase a home to achieve lower rates when the bigger challenge they likely face is finding a home at all. Therefore, if your clients are otherwise ready to purchase (e.g., on good financial footing), then there does not seem to be a good reason for putting off that purchase. In fact, well-positioned buyers could benefit from less competition for homes.
Executive Order 53 FAQs – ADDED 3/23/20
Earlier today, Governor Ralph Northam released Executive Order 53, in which he lays out specific direction to businesses across Virginia. While some businesses are now required to close for the next 30 days, YOUR real estate business is not. While you will still be able to conduct business, he did stress the need to follow the 10-person prohibition on gatherings, stress the need to telework and offer your services as remotely as possible and, if the need arises to conduct business in person, to do so following the CDC-recommended rules dictating social distancing, cleaning, and other means. Virginia REALTORS® is strongly recommending that members stop holding in person open houses. REALTORS® should be prudent and show the Governor that we mean business in helping to flatten the curve, or he will be forced to take additional action. More information is available on our COVID-19 Resources and Updates webpage.
Q. What does Executive Order 53 say about real estate?
A. Executive Order 53 says that while business operations offering professional, rather than retail services, like the real estate industry, may remain open, they should utilize teleworking as much as possible. When telework is not feasible, professional service businesses must adhere to social distancing recommendations, enhanced sanitizing practices on common surfaces, and apply the relevant workplace guidance from state and federal authorities.
Q. What does this mean for your business?
A. At this time, REALTORS® should be conforming with all requirements like other professional service businesses. This means that gatherings of more than 10 are banned, individuals should maintain at least 6 feet between one another, and increased sanitization should be done. To the extent possible, you should limit the number of individuals coming to your office. Try to meet with clients virtually as much as you can. Unlike other states where the governor has spelled out in detail what is and is not allowed, Virginia has left this more open. This ambiguity can benefit the industry if the industry continues to be responsible and take precautions.
Q. Is real estate an essential service?
A. It is unclear whether the Governor considers real estate an essential service at this time since the focus of essential/non-essential in Executive Order 53 was on retail businesses and not essential vs. non-essential professional service businesses. All professional service businesses, which includes real estate, may remain open with an emphasis on telework, social distancing recommendations, enhanced sanitizing practices, and the limit on gatherings of 10 or more individuals.
Q. Do we have to close our office?
A. At this time you do not need to close your real estate office, but you must implement procedures to ensure that you are in compliance with the governor’s executive orders. This means that you may not have groups larger than 10 people congregating, you should encourage telework, and when telework is not possible, follow other guidelines listed above. If you have large numbers of clients coming to your office, they should be shown to a conference room or office quickly so there are not groups of people congregating in the lobby or waiting area. If you have a large number of agents, you should not have meetings where all agents are encouraged to be there in person. Instead, you should hold sales meetings using technology that allows agents to participate remotely. Additionally, if you plan to keep your office open, you must implement procedures to disinfect surfaces more frequently.
Q. Are open houses still allowed?
A. Virginia REALTORS® strongly recommends that members stop holding in-person open houses. There is nothing in the Governor’s statement that addresses directly open houses, but it will be nearly impossible to ensure that all requirements of Executive Order 53 can be met with open houses. Continued operation of open houses could draw unnecessary negative attention to the industry. If agents continue to hold open houses which could violate the Governor’s most recent executive order, a new Executive Order could be issued addressing the real estate industry, not only banning open houses, but suspending all showings.
Q. Are individual showings allowed?
A. Yes, there is nothing to indicate that individual showings should be stopped at this time, but agents should work with their clients to limit the number of properties buyers see. While in previous months, buyers would often look at dozens of houses to see different features, or if a house was on their “maybe” list, restricting in-person showings to buyers who will be writing an offer on the property will help to reduce potential exposure and demonstrate that the industry is voluntarily working to protect the public.
Sales FAQs – UPDATED 3/24/20
Q. What should we do in the event that the courthouse closes between the date that the parties sign and the settlement agent records the title?
A. Speak to your settlement agent in advance of settlement date. There are a lot of factors that will come into play. If a courthouse is actually closed, no official business may be conducted, which includes recording land records. On the other hand, if the courthouse is just closed to the public, the clerk may receive land records electronically (or by other method) and record those records. This means that you will need to talk to your settlement agent to find out if the courthouse is closed or closed to the public, whether the courthouse is setup to receive electronic records, and whether the settlement agent is setup to send electronic land records.
Regardless of whether the courthouse is currently open, you may want to start having conversations with your clients about what happens if the courthouse does close between when they sign on the dotted line and the settlement agent goes to record. If the parties both intend for the buyer to take possession on the date they both sign on the dotted line, especially if this occurs on a Friday, they should consider entering into a pre-settlement occupancy agreement that is contingent on recordation being delayed due to a COVID-19 related event. Added 3/24/20
Q. What can I do to protect myself if a buyer or tenant wants to write an offer on a property without viewing it in person?
A. Virginia REALTORS® offers a “Sight Unseen” form that can be used if you have a buyer or tenant who wishes to write a contract or lease on a property they have not visited themselves. These forms have the buyer (600J) or tenant (200A) acknowledge that they have not been to the property, that pictures may be misleading, and they understand the risks associated with writing a binding contract on the property. These forms are available in the Virginia REALTORS® Forms Library and can be used even if a virtual tour is available. Added 3/24/20
Q. Will Virginia REALTORS® release forms language to assist with new and pending transactions?
A. Yes, Virginia REALTORS® has created a new COVID-19 Addendum (Form 600 COVID) that can be used in existing and new transactions. UPDATED 3/18/20
Q: Can I use the Virginia REALTORS® COVID-19 Addendum with a non-Virginia REALTORS® sales contract?
A. Yes, but check that capitalized terms (such as Settlement Date and Deposit) do not have different meanings in your contract. If there are differences, you can clarify any issues in the “Additional Terms” section by stating that “As used in this Addendum, Deposit means Earnest Money Deposit in the Contract”. Use of “Buyer” instead of “Purchaser” is not an issue since the form begins with defining that person.
Q. Is the Virginia REALTORS® COVID-19 Addendum mandatory?
A. No, like any other contingency, this document is not mandatory; however, getting this addendum signed early will help protect both parties should issues arise later in the transaction. ADDED 3/19/20
Q. What should I say if my seller asks why they should agree to the COVID-19 Addendum?
A. We have received a number of hotline questions from listing agents who have sellers that are impacted. (They can’t close on their next house, they are now subject to quarantine, there is a title issue that can’t be resolved due to closures, etc.) This form protects both parties by essentially pressing “pause” on the transaction for a period of time while things get figured out. While the form includes default timelines for the length of the “pause” and how long the “pause” can last in total, there are blanks that allow the parties to change those defaults to suit their needs. ADDED 3/19/20
Q. Remote Notarization – What is it?
A. Virginia law allows for remote online notarization. Remote notarizations allow an electronic notary to use the internet to notarize a document. Though there are certain requirements and it is a different experience than a traditional face-to-face closing, this is a great example of things we can be utilizing, as an industry, to help do our part to flatten the curve.
If you are an agent, talk to your broker about whether or not they know of your settlement companies or closing attorneys utilize it. If you are a broker, ask your settlement company or closing attorney. ADDED 3/23/20
Q. Can I refuse to show houses to someone who has been in an area with higher numbers of COVID-19 cases?
A. NAR has provided guidance that says you may ask all clients and potential clients if they have traveled recently or are showing signs of respiratory illness; however, you want to make sure that you ask ALL individuals the same question. Refusing to engage with a client or potential client who may be at risk could lead to a potential fair housing complaint. If you are concerned about exposure, you can always take additional precautions if your client has recently traveled to a location where there is higher risk of exposure.
Q. Can my seller refuse to allow access to their house?
A. It depends. If the house is not under contract, the seller can restrict access to their house, but it needs to be done in a uniform manner to prevent fair housing allegations. If your seller has concerns about exposure to Coronavirus, consider withdrawing the property or check your local MLS rules regarding no access to listed property. If the house is already under contract, the seller must allow access as called for in the contract. This typically includes inspectors, appraisers, and a few others. The seller does not have to grant access beyond what is called for in the contract (for example, the seller does not have to allow the buyer into the property to measure for furniture or drapes unless specifically stated in the contract).
Q. Can my seller demand I hold open houses?
A. This will depend on the terms of your listing agreement. The Virginia REALTORS® Listing Agreement (Form 400) does not specifically require the broker to hold open houses. Form 400 says the broker will “make commercially reasonable efforts” to obtain a buyer and that the seller authorizes the broker to “take all appropriate action to bring about a sale of the property.” If you are using a different form or have added language that says you will hold open houses, you will need to abide by the agreement.
Q. Can a buyer (or seller) terminate a contract because of Coronavirus?
A. There is nothing in the Virginia REALTORS® Sales Contract (Form 600) that would give either party the right to terminate because of Coronavirus. It is possible that the contract may be terminated under a different provision – for example, if a HOA office is closed and cannot provide the HOA packet, the buyer would be able to terminate.
Q. If the courts close, does that mean settlement can’t occur?
A. Many settlement providers are able to conduct closings electronically, and some courts are able to accept electronic filings. Speak to your settlement service provider about how court closings will impact your transaction.
Q. What happens if a buyer is unable to attend settlement because they are quarantined?
A. If the settlement agent is able to perform electronic (remote) settlements, settlement can still occur, even if the buyer is not able to be there in person. Speak with your settlement service provider about how this could impact your transaction.
Q. What happens if a seller cannot move out of the house because they are quarantined?
A. As soon as you become aware that this is a possibility, both agents should talk to their clients about the possibility of a post-settlement occupancy agreement. If a seller is under medically required quarantine, it’s unclear how courts would rule about the contractual obligation to deliver possession at settlement.
Q. Does the seller have to do a deeper clean when they move out, prior to settlement?
A. Most contracts in Virginia require the seller to deliver the property in “broom clean” condition. Without additional language in the contract, there is currently no requirement that the seller do any further cleaning before delivering possession of the property. If the buyer would like a deeper cleaning of the property, that should be negotiated and included as a term of the contract.
Q. If I hold an open house and someone who is sick comes through, am I liable if my seller or another person coming through the house gets sick?
A. It is unlikely that you will liable if someone gets sick from an open house. You can limit your risk by not holding an open house if the seller has been exposed or is showing symptoms of illness; asking people who attend the open house if they have been exposed or are showing symptoms of illness to take precautions or attend a different day or virtually; and reminding everyone to take precautions to limit their exposure and exposure of others.
Q. What can I do to minimize risk while holding an open house?
- Have all individuals who enter immediately wash their hands or use hand sanitizer.
- Have lots of extra pens and allow each person who signs in to use one pen that they then keep or you sanitize before another person uses.
- Ask people for their names and contact information that you write down or record on your electronic device
- Open all doors prior to the start of the open house so that people can walk around the house without touching door knobs
- Have paper towels near sinks in the event someone wants to turn a sink on/off.
- Restrict the number of people in the house at any given time to ensure that people can maintain the recommended 6 foot distance
Q. What if a buyer cannot get inspections during the inspection period because he or she is unable to schedule a qualified inspector? Or if a home owner is unable to get contractors to make the negotiated repairs?
A. Speak with your client about this possibility that home inspectors may be unwilling or unable to perform inspections during this period or that contractors may be unwilling or unable to perform repairs. Work that language into your offer, or, if you are already under contract, work with the parties to negotiate an amendment to the Home Inspection Contingency Addendum.
Q. What if a buyer can no longer obtain financing because of changes in income or employment?
A. The contract addresses what happens when the seller cannot obtain financing in the financing contingency and does not provide an exception for unemployment due to a pandemic.
COVID-19 Sales Contract Addendum
COVID-19 Sales Contract Addendum FAQs – ADDED 3/24/20
FAQ: Using the Virginia REALTORS® COVID-19 Sales Addendum
We’ve gotten a number of questions about the differences between the Virginia REALTORS® COVID-19 Addendum and the addenda created by other forms providers, so we’d like to answer some of the most common ones.
We want to start by saying that, under normal circumstances we don’t encourage the mixing and matching of addenda with contracts written by different forms providers; however, in the current COVID-19 environment, our highest priority is protecting the interests of your clients. Because the various addenda being created do a few different things, we encourage you to use the one that best addresses your clients’ circumstances.
Below, we provide guidance that is specific to the COVID-19 addenda that are being released by the various forms providers.
Q. Do you have to use an addendum?
A. No, but we strongly advise you to talk with your broker and have your client talk with an attorney before not using one. An addendum addressing the uncertainty created by the COVID-19 pandemic will help the parties to understand their rights and options under the contract as this situation continues to evolve.
Q. What happens if you don’t use an addendum or one party refuses to sign an extension or addendum?
A. Without the addendum, the parties remain obligated to perform under the contract as written. It is possible that one party could allege that the non-performing party is in default of the contract; however, Virginia contract law has a concept called “impossibility.” Essentially, if it becomes impossible for one party to complete their end of the bargain through no fault of their own, they will not be obligated to complete the contract.
Q. If you are already protected by contract impossibility, why do you need an addendum?
A. While the common law often provides answers for most situations, it involves going to court to fight over issues that can often be addressed more easily in the contract. Additionally, using an addendum allows the parties to set expectations and agree to certain terms up front, including the ability to terminate the contract at some point. If you rely on the concept of impossibility, the status of the contract, and the property, could remain in limbo for weeks or even months. Additionally, the EMD will have to be held in escrow until there is a signed release or a court order, meaning the buyer’s money could be tied up for months.
Q. Do you have to use one of the addenda created by an association?
A. While the law doesn’t require you to use a particular form, be aware that most E&O insurance policies will only cover transactions that use forms drafted by an attorney or trade association. Before you draft language yourself, make sure you talk to your broker and check your E&O policy. Additionally, drafting significant language for a transaction starts to cross the line into practicing law without a license.
Q. What is does the Virginia REALTORS® Addendum do?
A. The Virginia REALTORS® Addendum works to keep the contract alive. It can be signed when the contract is ratified as part of the initial contract or after contract ratification in the event that an issue arises later. The Virginia REALTORS® Addendum creates a mechanism where, should a complication related to COVID-19 arise, either party can send written notice to the other, essentially hitting the “pause” button on everything in the contract until a set number of days after the triggering event ends. There is also a maximum number of days the contract will be paused before either party can terminate the contract. Finally, it allows for either party to terminate the contract if the COVID-19 condition extends beyond an agreed upon number of days.
COVID-19 Housing Market Impacts FAQs – ADDED 3/20/20
About a quarter of home sales each year in Virginia occur in March, April, and May. As we are in the midst of the coronavirus storm, it is reasonable for buyers and sellers—and their REALTORS®—to have questions about the potential impact of the current situation on the economy and the real estate market.
The social, psychological, and economic impacts of the coronavirus, not necessarily the virus itself, are making a significant impact on the housing market, changing the way REALTORS® do business, and creating uncertainty among consumers.
We are still in the early stages of the response and impacts of the coronavirus. In such a fluid situation, predictions are difficult to make with a high degree of confidence. While it seems likely that we will experience an economic downturn, the specifics are hard to predict. New information is coming in each day, but so, too, are new questions and uncertainties.
Q: What do potential buyers need to know about market conditions related to the coronavirus?
A: Buyers who are in very secure jobs are actually in a good position to buy now because interest rates remain very low and other buyers may be sidelined. Those sidelined buyers include those who are taking a “wait-and-see” approach, while others are not in a position to buy a home because their income has been cut or they fear their job is at risk. A buyer may find that some sellers are more negotiable on price, knowing that there are fewer buyers out there.
While they might face less competition for homes, buyers will face other challenges. Some sellers are pulling their listings over concerns about the spread of the virus. In addition, some sellers may be apprehensive about making their homes available for in-person viewing. Even if a buyer can make an offer on a home, there could be challenges associated with finding appraisers, inspectors and other vendors to visit and examine occupied properties.
Finally, buyers need to be aware that it is possible that there will be a short-term, negative impact on prices. Therefore, a buyer who is looking to live in a home for a relatively short period of time (e.g. less than two years) should have realistic expectations about potential home value appreciation given that the coronavirus will have a dampening effect on price growth in the near-term.
Q: What do sellers need to know about market conditions related to the coronavirus?
A: Sellers will need to recognize that despite low interest rates, demand is going to be weaker. As a result, a seller may not be able to command the price that he or she anticipated going into the spring market.
Would-be sellers that have flexibility could defer selling with the hope that the market recovers quickly and demand bounces back. However, at this point, the long-term economic impacts of the coronavirus are not clear. Restrictions related to the virus could last months, with the Trump administration stating that the country could be dealing with cases through August. It is increasingly likely that the U.S. economy will head into a recession this spring (if it has not already). While Virginia can be somewhat insulated from the worst impacts of an economic downturn, there will likely be job losses throughout the Commonwealth, which could dampen demand even further.
Those who do need to sell now will need to work creatively with their REALTOR® to make sure they are marketing their home appropriately, making it possible for potential buyers to view the home, and setting realistic expectations about price.
Q: Are we heading into a recession?
A: Risks of a U.S. recession have been increasing as the effects of the coronavirus are experienced more broadly. There are several reasons why a U.S. recession is now likely in 2020. (We may find that we entered a recessionary period in March, though we won’t know until economic data are reported for the 1st quarter.) First, losses in the stock market will clearly have an impact on household wealth, which can make households feel less confident about their economic situations. Second, as more restrictions are put into place, people are spending less money. Because consumer spending supports about 70% of the U.S. economy, a slowdown in that spending will impact the overall economy. If consumer confidence retreats and spending dwindles as a result, the economy does not have many other sources of growth to fall back on, which could precipitate a new recession.
Third, businesses are increasingly making changes to deal with the impacts of the coronavirus. In some cases, companies are asking or requiring employees to work from home, hoping that there will be minimal impacts on productivity. However, for many businesses, teleworking is not an option. These businesses will have to decide how to manage during the coronavirus restrictions and interruptions to supply chains. Increasingly, more businesses are closing or laying off employees. As job losses increase, consumer spending falls even further, and the impacts extend more broadly from eating out and going to the movies, to buying a car or a home.
Q: Is the housing market in Virginia headed for a crash?
A: The short answer is probably not. While it is likely that the impacts of the coronavirus are leading the global and U.S. economies into a full-blown recession, the impacts on the housing market will be very different than what we experienced during the last recession in 2007 through 2009.
First, lending standards are much stricter now than they were back in the early 2000s when mortgage financing was easier to come by and people bought homes who may not have had the appropriate financial resources.
Second, and largely as a result of the tighter lending standards, price growth has been very steady in recent years, with prices up between two and four percent, annually. This pace of price growth is in stark contrast to the double-digit price appreciation we saw leading up to the housing market bust and Great Recession.
Third, before and during the last recession, Virginia had a surplus of homes for sale after a ramp up of new housing construction, particularly single-family home construction. We are in a very different situation now, where supply is extremely limited. In February, there was an estimated 2.6 months of supply, on average, across the Commonwealth.
Therefore, while it is likely that demand will soften in the near-term, there is little to suggest a major, long-term negative impact on Virginia’s housing market. Unless there are significant job losses in Virginia, which, right now, is not expected, many transactions that would have occurred this spring may be pushed to later in the year.
Q: Will home prices fall in Virginia?
A: In the near-term, there will likely be some slowdown in price appreciation and there may be model price drops in some markets across Virginia. A slowdown in prices results from softening demand as some would-be buyers take a “wait and see” approach and others have to delay a home purchase as a result of a disruption in income.
Home sales data are available for February, which reflect market conditions before the coronavirus was front of mind. The median sales price was up 8.3% compared to February 2019, following a 1.8% price increase in January. However, we obviously need to wait and see what March will bring.
Q: Are there certain parts of the market that could be more adversely impacted?
A: The downturn in the stock market could have an adverse effect on those households who were planning to use stock holdings to fund a down payment. It is likely that this could have a bigger impact on the top end of the market, where financial market wealth is more often used as a source of funds for luxury homes, as well as second homes and investment properties. As a result, Virginia REALTORS® could see a softening of prices of homes in the upper price segments and these homes could stay on the market longer. These impacts could be more strongly experienced by REALTORS® in some of the higher-priced markets in Northern Virginia, as well as in some of the Commonwealth’s second home markets.
Broker-Specific FAQs – UPDATED 3/24/20
Q. Where can I find NAR’s guidance documents along with hot topics about how the industry is changing due to the coronavirus (COVID-19)?
A. NAR has a coronavirus landing page. Click here to view.
Q. As an employer, where can I find more resources and guidance for employers?
A. NAR has released Coronavirus Resources and Guidance for Employers.
Q. Where can I find CDC guidance for businesses and employers?
A. The Centers for Disease Control and Prevention has provided guidance here.
Q: What is congress doing to assist employers with employees that need to take leave because of the coronavirus?
A: The Families First Coronavirus Response Act, which goes into effect on April 2nd, provides guidance and assistance for emergency family and medical leave, emergency paid sick leave, and emergency unemployment.
Q. Will Virginia REALTORS® release forms language to assist with new and pending transactions?
A. Yes, Virginia REALTORS® has created a new COVID-19 Addendum (Form 600 COVID) that can be used in existing and new transactions.
Q: Do you have suggestions for budget-friendly and easy to use video conferencing options?
Q: If I have IT issues and can’t get a tech to come out, are there other alternatives?
A: Yes. Virginia REALTORS® offers a free Tech Helpline service offering support for hardware, software, networking, and digital devices. Call 1-800-276-4216.
Property Management FAQs – UPDATED 3/24/20
Q. Can we conduct a video tour for the walkthrough at the end of the lease?
A. Yes, conducting a video-conference type walkthrough would allow for a tenant who is concerned about potential exposure to COVID-19. If the tenant will be participating in the walkthrough remotely, we suggest you get something in writing, confirming that they prefer to be remote for the walkthrough. Added 3/24/20
Q. What happens in the case where an order of possession was entered by a court on an unlawful detainer, the 10-day appeal period expired with no appeal being perfected, and a writ of eviction was issued but has not been executed by the Sheriff, prior to the order declaring judicial emergency on March 16th?
A. Please have an honest conversation with your owners about the current situation and with your owners and tenants to identify pragmatic solutions other than eviction for the immediate future as we all deal with the impact of COVID-19. Under Virginia law, an order of possession entered by a judge is good for 6 months from the date of entry by a judge. A writ of eviction is good for 30 days but if the landlord allows a writ of eviction to expire without execution by the Sheriff, the landlord may request additional writs of eviction so long as one is requested prior to the expiration of 6 months from the date of entry by the judge. Allowing an existing writ of eviction to expire does not prevent the landlord from evicting the tenant, in the future, if satisfactory financial arrangements and payments are not made by the tenant with the landlord. UPDATED 3/18/20
Q. My tenant did not pay the rent. Can I still file an unlawful detainer?
A. No, not right now. The landlord-tenant relationship is established through the terms of the lease, subject to the underlying Virginia Residential Landlord Tenant Act (VRLTA). The law has not changed at this time with respect to a tenant’s obligation to pay rent. However, the Supreme Court of Virginia issued a court order applicable to every court in the Commonwealth that declares a judicial emergency beginning March 16, 2020 through April 6, 2020. There is a possibility that this could be extended an additional period of time if the Chief Justice of the Virginia Supreme Court determines that is appropriate.
This means that all civil matters pending on Monday, March 16, 2020, including unlawful detainers, have been continued until after April 6th, at the earliest. In addition, the order of the Chief Justice of the Supreme Court provides that no new filings will be allowed until after the judicial emergency has been lifted. Landlords and property managers should maintain contact with their local court system to keep up to date on their processes. Property managers and landlords should come up with a policy of how to address these issues with tenants and landlord/owners in the coming weeks and months (e.g., working out payment plans, serving notices, communicating with tenants).
Q. I already filed an unlawful detainer against my tenant for violating the lease and causing a threat to health and safety for other tenants. What happens now?
A. The order of the Supreme Court of Virginia declared a judicial emergency beginning March 16, 2020 through April 6, 2020. There is a possibility that this could be extended an additional period of time if the Chief Justice of the Virginia Supreme Court determines that is appropriate. This means that all civil matters pending on Monday, March 16, 2020, including unlawful detainers, have been continued until after April 6th, at the earliest. No distinction has been made at this time between an eviction for non-payment of rent and an eviction for non-rent reasons. If you have a significant health and safety violation with a tenant, you should contact an attorney and your local court to find out if there are any procedures to address health and safety violations by a tenant.
Q. What happens when my tenant cannot afford to keep utilities on pursuant to their obligation under the lease because of this crisis?
A. Many utility services are offering some sort of limited protection against terminating services during this public health crisis. In addition, the State Corporation Commission issued an order on Monday, March 16, 2020, prohibiting any utility cut-offs for at least 60 days. If tenants have questions on this issue, they should contact their relevant utility provider.
Q. My tenant’s lease is up and he was supposed to move out this week or in the coming weeks. They are refusing to leave. What do I do?
A. Property managers should begin to communicate with their owners and consider how you will handle tenant requests in the coming days and months. The terms of your lease with the tenant still govern everyone’s rights, obligations, and potential remedies during this national emergency. A tenant who doesn’t vacate may be subject to legal action, but whether a particular landlord is willing to pursue those remedies is ultimately up to that landlord. The Supreme Court of Virginia issued a court order applicable to every court in the Commonwealth that declares a judicial emergency beginning March 16, 2020 through April 6, 2020. There is a possibility that this could be extended an additional period of time if the Chief Justice of the Virginia Supreme Court determines that is appropriate. This means that all civil matters pending on Monday, March 16, 2020, including unlawful detainers, have been continued until after April 6th, at the earliest. The order of the Chief Justice of the Supreme Court provides that no new filings will be allowed until after the judicial emergency has been lifted. In addition, the Governor has requested that all vulnerable populations, including those with chronic health conditions and those over age 65, begin to self-quarantine. This could mean that people will not be able to leave their homes. Again, property managers should begin to communicate with their owners and consider how you will handle tenant requests in the coming days and months.
Q. I manage a building with 15 units and have had tenants coming to me asking if anyone in the building has been diagnosed with COVID-19. Can I answer this question? If I know of a verified diagnosis do I have to answer?
A. No. At this time, an active COVID-19 diagnosis is not a required disclosure. A material adverse fact must pertain to the physical condition of the property, not the tenant residing there. There are also privacy issues that would likely prohibit such disclosure.
Q. I am trying to schedule the showing of a rental property, but the current tenant refuses to allow it based on health concerns. What do we do?
A. During this time, it is advisable to look at other options. Perhaps a video walk-through of the property could be used to show to prospective tenants to decrease the amount of people walking through the occupied unit.
The terms of the landlord-tenant relationship, including access to the rental unit, are established through the lease and the provisions in the VRLTA. Most leases have a provision that allows the landlord to bring prospective tenants through the property under specific conditions. It is ultimately up to the landlord discretion to determine whether to push to enforce the provisions or to take another approach. Should the landlord decide to move ahead, it is important to take all appropriate health and safety measures to protect both the current and prospective tenants. Click here to see the recommendations from the Center for Disease Control (CDC).
Q. My current tenant is exhibiting symptoms of COVID-19 and/or has been diagnosed. What responsibilities does the tenant have? What responsibilities does the landlord and/or the property manager have?
A. A sick tenant is responsible for taking all advised health and safety measures to maintain the property – including cleaning, sanitizing and the like – as the tenant would do with any similar illness. Though the condition of a property based on the current tenant’s illness may not be the landlord’s responsibility, the landlord may be responsible for cleaning and sanitizing the property for a future tenant. Again, click here see the recommendations from the CDC.
Q. We are closing down our property management office to the public for the next four weeks and would like to require all tenants to pay their rent online from now on. Can we do that?
A. If your lease or rules and regulations already allow this, then yes. Under the VRLTA, you can adopt a policy or rules and regulations to implement such a procedure. You should be aware that there will be tenants who do not have internet access (and can no longer go to a public place to obtain it) or the ability to do online banking. Accommodations should be made for these tenants such as a dropbox in a central location.
Q. As a property manager, what is my responsibility to clean a unit before a new tenant moves in? Can the tenant require that I clean to a certain standard? What if I know the previous tenant was infected with COVID-19?
A. While there may be emergency standards established by a state government agency, none exists at the present time. It is important to use an accepted industry standard. Click here to see the recommendations from the CDC.
Q. I have repairs and routine maintenance that need to be done on my rental dwelling units, but my vendors are backing out and tenants are nervous about letting people into their apartments. What do I do?
A. This is a good place to be proactive. If you do not have your own maintenance/repair professionals on staff, reach out to your third-party vendors now and see what their company policies are with respect to whether they will continue to work in the coming weeks. Line up a back-up plan as needed. Communicate with your vendors about what their health and safety protocols are so that if the tenant asks, you can provide that information. If you have a tenant that is refusing vendor access, work with the tenant as much as possible to postpone routine scheduled maintenance or stabilize the repair as needed.
Licensing & DPOR FAQs
Q. My license is due to expire, and I cannot complete the required CE classes because I cannot access online CE. What do I do?
A. DPOR is extending the validity of all licenses, certifications, and other credentials issued by its regulatory boards that would otherwise expire during the declared state of emergency and the Governor’s Executive Order. Right now, that means that your license will be good through the current length of the Governor’s Executive Order, June 10, 2020. Additionally, you will have 30 days after that to make sure your CE is up-to-date and that all of your other requirements are met.
Q. I am able to complete online CE and have access to pay my renewal fee online. Can I go ahead and renew my license now, or do I have to wait until after the state of emergency has passed?
A. If you are able to, you can complete online CE and pay your fee online. You can complete the paperwork for renewal, but understand that DPOR will be under-staffed and that you may have a delay in processing.
Q. Is DPOR still open and conducting business?
A. Effective March 18, 2020, DPOR Offices at the Perimeter Center will be closed to the public, but business will still be conducted. Visit DPOR’s website for updates regarding their operation.
Q. Where can I find a list of approved online-CE classes?
A. Approved online-CE classes can be found at the following links:
Sales Tips & Suggestions
- Talk to your clients about what their concerns are. Are they part of the vulnerable population? Do they have someone who is vulnerable living with them or that they interact with on a regular basis (and therefore they want to limit their exposure)? What are their priorities? Can/will they delay settlement? What accommodations can/should you make to help them with the transaction?
- If the seller is concerned about exposure or is self-quarantining because of exposure or illness, discuss possible alternatives to an open house, such as you hosting online sessions where you walk through the house using video and answering questions for potential buyers. Alternatively, look at your MLS rules and consider changing the status of the listing to allow showings by appointment only or even to stop showings until a later date. Talk to the seller about whether to accept back up offers in the event that the buyer cannot perform due to complications related to the pandemic.
- If a buyer is concerned about exposure, talk to them about the possibilities of you using Facetime or another video-telephone option where you can “show” them the property while they stay home. Talk to the buyer about what is and isn’t required by the contract, especially related to access to the property and the property condition at settlement. If your buyer wants or expects a deeper cleaning, that is something that likely needs to be specified in the contract itself.
- Talk to all clients about what could happen if the other side cannot move at Settlement, or if there are larger industry impacts (courts closing, delays with lenders or other providers due to diminished staff). Consider an addendum to the contract that delays settlement and/or essentially “pauses” the contract (and all contingency deadlines) for a number of days (watch for language provided by Virginia REALTORS in the coming days).
- Figure out whether your buyer is local or not. If not, where are they coming from? (States with large numbers of cases/countries with travel restrictions)
- This information could give the seller some indication of whether settlement is more or less likely to be delayed. Understand that the buyer’s current location isn’t necessarily a guarantee of whether they will need a delay, but if you have a buyer coming from a country currently under quarantine or with restricted travel, make sure to start talking to the buyer agent and the seller early on about whether there will be an impact and what this could mean for your transaction. For example, if the buyer is purchasing the property as an investment and does not plan to live there, it’s possible they will be able to proceed as planned; on the other hand, if the buyer is moving here for a job, which has been delayed due to travel restrictions, it’s possible the buyer might have to delay settlement and could have issues related to their loan if the job offer is rescinded.
- Talk to your settlement provider – are they able to do remote settlements? What plans do they have in place to protect your clients?
- You want to have early and frequent communications with your settlement agent to know what their plans are and what, if any, hiccups they may see coming down the road. If the settlement provider is not able to handle remote settlements, talk to the clients about the possibility of moving to another settlement provider (depending on where you are in the transaction this could have a bigger impact)
- Talk to your settlement provider about what may happen in the event that the courts close. Some courts in Virginia have closed while others are simply closed to the public.
- One thing to keep in mind – communication with your clients and agents on the other side of the transaction can do a lot to help manage expectations and keep transactions moving smoothly.
If you have a specific question for us, please use the Legal Hotline.