The COVID-19 pandemic has escalated dramatically in recent weeks, and many state and local governments have effectively shut down their economies, except for essential services. New York, Virginia, and Michigan are just three examples of states that have this type of order in place as of March 27.
Now, some businesses are clearly essential. Grocery stores and healthcare are two obvious examples. Pharmacies, gas stations, and banks are others. But what about real estate? Do people really need to be able to buy and sell homes or proceed with real estate closings that were already planned?
Is real estate an essential service?
The short answer is that it depends on the specific order that applies in your jurisdiction. When your governor, city council, or other authority issued its directive, it probably also released a list of businesses and services that are considered "essential."
As an example, the closest city to where I live, Columbia, South Carolina, just issued a stay-home ordinance that specifically designates 44 types of businesses as essential services. And "residential and commercial real estate brokers" is one of them. To be clear, many real estate businesses will likely decide it's in their best interest to close due to either safety concerns or lack of business. But they can operate if they want.
On the other hand, many places don't feel the same way. While Illinois and Wisconsin also consider real estate businesses to provide an essential service, New York and Pennsylvania don't, just to name a couple of examples. In all, 17 states consider real estate to be an essential service, according to the National Association of Realtors.
Even if real estate businesses are considered essential where you live or plan to buy a home, they could still be restricted. Many places have prohibited gatherings exceeding a certain number of people, so you couldn't have, say, more than 10 people in an open house if such a crowd is prohibited.
Furthermore, many shelter-in-place and stay-home orders tell even essential service providers to work remotely whenever possible. So, even if real estate is considered essential, if you could accomplish something remotely, such as signing a purchase contract, it should still be done that way. On a similar note, even where real estate is not considered essential, anything that can be accomplished by remote work should still be permissible.
Finally, only some real estate businesses might be considered essential. I mentioned that Columbia, South Carolina, specifically cited real estate brokers as essential. But it doesn't say anything about adjacent businesses like appraisers, home inspectors, real estate attorneys, etc.
Introducing the coronavirus addendum
Thankfully, if you were previously scheduled to close on a property, most jurisdictions have created coronavirus addendums that can be attached to existing purchase contracts. Regardless of what stay-at-home orders may say, this certainly makes real estate services less essential, at least when it comes to existing purchase agreements.
The details of these addendums can vary, but they can typically be used to extend closing dates, inspection periods, or financing contingencies. If you can't close because you lost your job or income due to the COVID-19 pandemic, the addendum can also be used to let the buyer out of the contract penalty-free.
If you're curious about your options in the current situation, ask your real estate agent if there's a coronavirus addendum available in your market or if there are other options you could use.
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