It’s one thing to truly see yourself inside of a beautiful new estate in one of the most scenic places California has to offer. It’s quite another to have that viewing solely come via technology.
Such was the case for at least one buyer for Berkshire Hathaway HomeServices California Properties, which reported the closure of the sale last week.
“Someone saw (the home) virtually in New York and she has not seen the property, she has not been to the property and she bought the property sight unseen with all the virtual tours and will be closing without actually physically seeing the property,” said Kyle Kemp, district manager for Berkshire Hathaway.
The agency has shut down its local office and agents are now working remotely, conducting Zoom video conference calls or connecting digitally with prospective buyers or sellers due to the COVID-19 pandemic. Virtual home tours have become extremely popular among agencies around the nation, though there are situations in which a buyer would still be able to physically traverse the hallways and ensure that the bathroom is in the proper place before striking a deal. Those meetings are conducted with masks and gloves, customary to operations at various other businesses due to the pandemic, Mr. Kemp explained.
Berkshire initially experienced a 50% drop in the number of transactions, though listing prices have remained stable. Some sellers have become fearful of putting their house on the market due to the extra foot traffic it may entail.
“Buyers are driven by need number one, and then secondary is confidence,” Mr. Kemp said. “If they’re feeling like there’s confidence in the environment and in the economy and jobs, that creates a strong buyer market which drives our prices.
“This just created a big unknown and that takes confidence out of buyers.”
Most of the deals that fell through were deals that were put into escrow before the widespread closures or were in the middle of escrow when implications of the pandemic went into place, he said.
Over the past two weeks, things have started to turn around. The deals that have been in place are buyers since the closures “are staying solid” and Mr. Kemp said that sellers are beginning to talk about how to carry out the process.
“We just had to get around the logistics of it, but it’s all starting to come back around,” he said.
“The beauty of Santa Barbara is people want to be here.”
There is a strong demand from buyers from places like San Francisco and L.A., along with people from out of state. The biggest issue now is how to get the buyers here.
“From out of state, it’s almost impossible,” Mr. Kemp said. “We would be selling houses today if we had the buyers to get here and they’re starting to see a way to see houses, so we’re starting to see some transactions.”
Spring is typically when many sellers choose to put their homes on the market, while most families look to be settled in toward the end of summer when school resumes, he said.
While many of the digital features being offered through real estate sales will certainly remain, Mr. Kemp said he feels agents will be able to adapt in a major way once the pandemic is over.
“The beauty of real estate is that it’s a personal connection,” he said. “I think there is going to be a big drive for people to have that personal connection again. I think the agents will be more pertinent than they were prior to this to be honest with you, because so many people were pulling away to the digital world… but I think people are also seeing the need for that connection.”
As someone who has been in real estate for 30 years, including the past 12 years managing in Santa Barbara, Mr. Kemp has seen quite a bit in his time.
“I’ve been through earthquakes, floods, fires, economic downturns, foreclosures, short sales — I mean, in 30 years I’ve got a taste of it all, which is good and bad,” he said.
Having said that, events that were as devastating as the Montecito debris flow certainly hurt business, though that was a temporary setback which was followed by a successful business year.
“In Montecito, we took a 40% hit on sales and it was a while before that came back and there are still trepidations from people because the memory is still fresh. The fact is that we got around it, and by the way we had our best year ever last year.
“Even though that major catastrophe happened and the terrible things that happened because of that, the buyers came back, everything came back and we are headed in the right direction.”
The business impacts were a “small sample” compared to the current situation, though Mr. Kemp believes that buyers will again return once the pandemic subsides.
“This is a much bigger picture, but I can tell you for the most part people tend to have short-term memories,” he said. “Once things end, they tend to move on pretty quickly.”
As serious discussions continue between buyers and sellers, the big question on everyone’s mind is when the pandemic will end.
“I can never answer that questions,” Mr. Kemp admitted.
If the pandemic were to end in the next two months, things may recover quickly. If it were to last longer, bigger problems could be on the horizon, he said.
“Ultimately, the way it seems like it’s going currently is that we’re figuring out to make it work. People still want to buy houses, people still want to sell houses and we’re seeing a lot of them now saying, ‘This is the time,’” Mr. Kemp said. “I would say that if you want to sell your house in the next year, I think you’re safe to say you could probably sell it. You might want to take a little discount off the price to make sure, but it’s not a big discount right now. Six months from now? I don’t know what that picture is going to look like.”
by Mitchell White