Table of Contents
Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.
- As a financial planner, Mark Reyes of Albert walks his clients through the financial side of preparing for home buying all the time.
- But four things were slightly different than he expected in the process of buying his own first home with his wife during the coronavirus pandemic.
- The pandemic created more competition for homes, and also meant many changes to the ways buyers are able to see potential homes.
- There are some parts of the process that are confusing even in normal times, like getting the right paperwork to mortgage lenders, and the escrow process before closing.
- Sign up for Personal Finance Insider’s email newsletter here »
Buying a home is a complicated process, even in the best of times. While the coronavirus has made some parts of the home-buying process harder, there are some things that are always a challenge.
As a financial planner, Mark Reyes of money management and investing app Albert spends a lot of time walking people through the financial side of the home-buying process. But, buying his own first home with his partner was quite different than he expected, and got more complicated with the pandemic.
Here are the four things he says surprised him about the process of buying a home.
Getting the home you want is harder with more competition
Home buying has had a big moment during the pandemic as homebuyers look for more space, and it’s made stiff competition for buyers.
“The competition, especially like in our market in Southern California, has really increased since the stay-at-home orders,” Reyes says. “The demand for housing and more room has increased a lot. We’ve seen a lot of reemergence of the suburbs, like a lot of millennials kind of going back to the suburbs and looking to buy houses.”
While there are obvious benefits to shopping for a home right now with such low mortgage interest rates, it also means more buyers are competing for the same homes.
There’s no such thing as an open house right now
Even for first-time homebuyers like Reyes, home shopping during the pandemic is very different from what most people expect. “We’ve been to open houses, pre-pandemic, and it was like a party,” Reyes said. “But now it’s very different.”
In his experience shopping in the Los Angeles area, things have completely changed. “Every house that we saw with our realtor, we had to wear a mask and we had to sign disclosure forms, and sometimes we had to wear gloves. It was such a interesting time,” he says. “While we’re wanting to feel comfortable in this potential home, we also have be responsible citizens and make sure that we’re taking each other’s safety into consideration.”
In most markets, open houses are highly discouraged, and that’s changed the way potential buyers see homes.
Getting all the documents together was much harder than it sounds
Even in the best of times, getting all of the documentation required by mortgage lenders can be a pain. But, Reyes says he was surprised by just how specific and time consuming the process was.
“Having all of our mortgage documents in place for the mortgage lender was kind of a pain,” Reyes says. Oftentimes, mortgage lenders need very specific documents in specific formats to be able to accept them. “My mortgage broker needed the URL, of all things, on the bank statements. It was such a pain,” he said.
He ran into several bumps while using an online bank, especially when things required a certain format. “There were certain documents that I needed customize, and I wish I would have had an in-person experience to work through some of those issues,” he says.
The escrow process was complicated as a first-time buyer
For Reyes and his wife, the hardest part came after they’d already found the home they wanted, made an offer, and had that offer accepted.
“The whole escrow process was very new to us,” he says. “As a financial advisor, I knew the general rules for buying a home, and what’s affordable. But the escrow process, with the contingencies and the timeliness of things, that was a challenge.”
Contracts for buying real estate come with a variety of conditions that must be met by a certain date, called contingencies. Generally, real estate agents and mortgage lenders know these well, and help to advise buyers. But there’s a lot of work for the buyer to do in that timeframe — oftentimes, meeting contingencies includes arranging financing, and things like organizing an inspection.
Reyes says that an online calendar helped to keep himself, his wife, and his real estate agent on the same page. “We created a specific calendar to say, ‘Oh, this contingency’s gonna fall off in two days, this contingency is going to end in another week.'” In his experience, it was a big help to keep everything moving along and on track for closing.
Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.