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ASK RK: Strategies to buy and sell a home in the time of COVID-19

Caution tape social physical distancing business COVID 19

Self-isolation. Self-quarantine. Mandatory quarantine and #FlattenTheCurve. All terms dominating the news and views these days and with good reason. The COVID-19 pandemic threatened the health institutions put in place to protect us, and wreaked havoc on business and commercial ventures. Despite these difficulties, governments and citizens are trying to push forward — finding solutions even when things look a bit hopeless. But how does the slowdown look for home buying and selling?

We’ve dealt with economic slowdowns, all-out recessions and even pandemics, in the past, but never all three at the exact same time. This truly is an unprecedented time and the solutions required need to be dramatic and drastic. 

Richard Baldwin, professor of international economics at the Graduate Institute of International and Development Studies in Geneva, summed up the importance of continuing business aptly in a recently published article in the Chicago Booth Review. He compared the impact of the pandemic to the effect caused by a burned out bulb in a string of old Christmas lights. One goes down, the rest follows, and we are plunged in darkness until we can find a fix. 

Decades ago, that fix would’ve required us to check each bulb, one-by-one in order to find and replace the culprit. This solution worked best because bulbs were expensive and labour was cheap. 

Today, the solution is to “keep the lights on,” according to Baldwin.

The economics professor writes, while the cost of financial stimulus may be expensive, the ability for this stimulus to minimize disruptions to workers and businesses will be “worth it.” 

From a real estate perspective, how can housing market professionals, buyers and sellers keep the lights on?

Here are six tips that can be used by either the home buyer or the seller on how to buy and sell a home during the COVID-19 pandemic. 

Strategy #1: Get a home inspection

Pre-pandemic, it was typically the buyer who chose whether or not to pay for an independent home inspection. This is still the case, but, now, seller’s should consider paying for this service — and then use it as part of your transparent selling strategy.

“The more a seller can be open about the house and the process, the easier it will be to sell the property,” explains Mark Weisleder, a 30-year veteran of real estate law and a senior partner with the law firm Real Estate LLP. An inspection report by an independent professional home inspector signals to the buyer that a professional has visually inspected the home and flagged any potential concerns. It’s not about creating the image of a home without faults, but being transparent about potential faults, while highlighting the benefits of this particular property. 

Strategy #2: Pay for accurate measurements


Whether it’s a buyer looking for a home, or a tenant looking for the right unit to lease, the seller will need to find ways to provide visually engaging images of the property, as well as accurate information about room sizes and locations. 

Weisleder suggests the seller set up video calls, where the prospective buyer or tenant are given a virtual tour of the property. 

Another option is to pay for a virtual tour. Prices start at $250, depending on the size of the home, and quite often include a short video as well as an interactive floor plan that offers still shots of the home. 

But sellers should go one step further and pay for accurate square footage measurements. 

In residential real estate in Canada, there are no rules or regulations when it comes to how room measurements are taken or recorded. For many listings, the size of rooms are approximate and, quite often, taken from the listing information from the last time the property was for sale. In new builds, measurements are often 7% to 12% greater, on average, than the actual square footage a buyer gets after they move-in, since builders are allowed to market units based on measurements from external wall to external wall. 

By paying a few hundred dollars, up front, you give potential buyers a far more accurate description of the property — and this goes a long way to helping people appreciate what is being offered for sale. “Visual walk throughs using a tape measure [or professionally measured floor plans] enable buyers and tenants to figure out if couches fit and dining tables work,” explains Weisleder — all questions would-be buyers would normally have answered during an open house or showing. 

Strategy #3: Offer a home warranty


In the United States, most buyers will only purchase a home if a home warranty is included in the price. This way, if a major component or appliance breaks down, the buyer isn’t stuck with a massively expensive repair bill. 

Up until recently, it was virtually impossible to get this kind of home warranty protection in Canada, until FCT launched a product in late 2019 (pre-COVID-19 restrictions). 

WIth the purchase of the FCT home warranty a seller or buyer gets 18-months and up to $20,000 in warranty coverage for major household systems and components, including foundation, roof, heating and cooling. According to the FCT blog, the average claim payout for this coverage is just under $8,000. The cost of the coverage is roughly $350. 

“If sellers want to provide buyers peace of mind, they can purchase and offer this home warranty coverage as an inclusion in the purchase of the property,” explains Weisleder. “It gives the buyer protection, particularly at a time when properties cannot be seen or thoroughly viewed.” 

Strategy #4: Only accept closing dates that are 60 days or less

As we are all now very aware, a lot can change in a day, nevermind 30 or 60 days. To minimize potential when closing a deal, sellers and buyers should insist on a closing date that is less than 60 days from the date of agreement acceptance. 

“You don’t want to have long closing dates,” says Weisleder. “If a buyer can agree to a shorter closing date, it shows that they are serious about the transaction. Get them to provide a good deposit up front and you’ve got a better chance of a deal closing without hiccups.”

Strategy #5: Use clauses to guarantee social distancing without disrupting the deal

Covid 19 virus danger   Businessman working at safety of home of

One of the most significant requests made — and the most disruptive to business, as a whole — has been the need to be physically distant. (The original term was social distancing, but people took exception to this term, stating that socialization was important at a time like this but close physical proximity was not.)

The idea is that we cannot transmit the virus through the community if we don’t have contact with the community. As a result, we’ve been asked not to gather in crowds (or even small groups); we are to stay two metres (about six feet) away from people and we are to limit non-essential travel. 

For buyers, this can create problems when trying to close on the purchase of a house. For instance, most offers require a buyer to provide a bank draft deposit. To get this draft you’ll be required to spend hours in a bank line-up (six feet away from the person ahead of you and the person behind you) before you’re able to see a teller in order to get a bank draft. 

For sellers, the problem can arise when they must sign contracts with their Realtor or hand over keys and sign forms with their legal representative. 

To limit the number of trips required and the number of people you see, consider adding very specific clauses to the agreement to purchase contract. 

To eliminate the need to go to a bank branch and to avoid having to show up and meet someone to give them money, keys or documents, add in the following clauses (all courtesy of Mark Weisleder, senior law partner at : 

  • The Buyer shall pay the balance of the purchase price, subject to the usual adjustments by wire transfer.
  • The parties acknowledge and agree that all closing documentation can be signed electronically and forwarded by email or fax in accordance with the Electronic Commerce Act, 2000, S.O.2000,c.17
    [Ontario based, see relevant Act for your province.]
  • The parties agree that the keys to the property shall be left in a lockbox at the property and the code to the same is to be provided to the Buyer’s lawyer in escrow pending closing of this transaction.
  • The parties herein acknowledge and agree that they are required to close this transaction notwithstanding any impacts of COVID-19, save and except the closing of the Land Registry Office(s) and all financial institutions. In the event the closing cannot occur due to a shutdown/disruption of the Land Registry System and/or banking system, then the closing date shall be automatically extended to the fifth (5th) business day following the date upon which said systems have returned to operational status and can clear funds accordingly.

“The first three clauses eliminate the need for meeting in-person,” explains Weisleder. 

The fourth clause stipulates how to handle the deal should a delay with the legal part of the transaction, specifically the government registration system, goes down, explains Weisleder. If you don’t add this clause and a delay does occur, the seller may not see their money on closing day; the buyer may not move-in on closing day, and, as a result, additional legal actions could be a result.  

One final clause a buyer or seller may want to consider is adding in a provision that should either party suddenly find themselves under mandatory quarantine, due to COVID-19, the deal with continue, but that both parties will agree to extending the closing date by 14 days. “This type of clause would protect the deal even if one or both parties find themselves sick and under mandatory quarantine, due to COVID-19 health requirements,” explains Weisleder.

Strategy #6: Pay for title insurance

Once the deal is struck and finalized and a price has been agreed to and a closing date solidified, it’s time for the buyer to get a bit of assurance with the purchase of title insurance. (This coverage typically costs between $250 and $500 depending on the property.)

“Title insurance offers protection from potential problems that can arise from gaps,” says Weisleder. For instance, if there is a delay in registering the transaction — either because the government offices are closed due to a national holiday or closed due to a health emergency — title insurance will cover any issues that may arise before the transaction is legally finalized. 

Past examples of how title insurance has helped buyers avoid expensive problems include: 

  • Avoiding the cost of paying for a lien that’s registered against the property (but has nothing to do with the new buyer); 
  • Paying for back taxes owed by the previous seller; 
  • Paying to remove names from the deed to the home of people no longer associated with the property’
  • …and the list goes on. 

For buyers and sellers, these six strategies should help protect you from unexpected costs, unfair dealings and, yet, still allow you to comply with health authority requests to prevent the transmission of COVID-19.

Additional reading to help homeowners and renters during the COVID-19 outbreak:

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Romana King

Romana King is an award-winning personal finance writer, real estate expert and the current Director of Content at Zolo. Romana has contributed to business and lifestyle publications including, Toronto Sun, Maclean’s, MoneySense, Globe & Mail Custom Content Team, and The Toronto Star. Among her achievements, Romana won silver for her annual Where to Buy Now real estate package in the 2019 Canadian Online Publishing Awards. In 2015, she won a SABEW Business Journalism award. When she was editor of CI Top Broker, Romana helped guide her team to obtain its first KRW Business Journalism nomination, and in 2011, she was part of a small team that helped MoneySense win Magazine of the Year at the 34th annual National Magazine Awards.