Consumers have obviously slowed down plans to purchase their, homes, condos and co-ops throughout the United States, especially in those states where Realtors haven’t yet been able to physically go out in person and show the property. Some 34-million-plus people are currently unemployed, so it’s no wonder that the National Association of Realtors’ chief economist, Lawrence Yun, predicts sales for the second quarter will be off by 39.5 percent but will pick up sometime in the third quarter.
It’s an unfortunate circumstance of Covid-19 and to keep everyone in place to stay safe. However, even though we could take advantage of using videos and 3D virtual tours to showcase our properties, it’s definitely not the same as actually visiting the property and walking through, opening doors, inspecting cabinets and getting a firsthand feel of the home. As a result, many purchasers put their buying plans on hold over the last several months.
It could take a considerable amount of time for the typical consumer to be comfortable making their largest “lifetime” purchase via a virtual tour or video. Maybe over three to five years they would be more used to it, but can we wait that long? I doubt it! There are those who have been fortunate working from home and getting paid, which many in the IT business have been doing for the last two months. But I believe working at home and being sequestered and using zoom.com or the gotomeeting.com type services to stay in touch can never replace the workplace environment, the group, one-on-one relationships and contacts that many have built over the years. But they still received a weekly paycheck as Realtors didn’t, unless we were fortunate to receive a stimulus check or were able to do a deal.
Many IT companies are realizing, however, that business can be done successfully remotely while being able to minimize or eliminate their space as a way to reduce costs. The other choice to return the office involves current requirements to have desks spaced six feet apart, which could increase costs by needing greater spaces to work within. That doesn’t seem probable. Another logical possibility is striking a balance by having a percentage of employees work from home as they have been and reduce the necessary work areas and/or increase spacing for others to work from the company’s office.
But the remaining scary and sad options are layoffs of those who no longer fit into the corporate template and culture of the necessary efficiency and profitability due to the lingering effects of Covid-19. There are choices, but due to the catastrophic loss of income over these weeks, most companies are figuring out what will work best to become profitable once again. We should have been offered these options from the get-go in having a certain number of agents within an office space and the rest working from home, but still being allowed to meet clients at properties.
There are numerous major retailers and other well-known businesses that have filed for Chapter 11 bankruptcy protection: Neiman Marcus, J. Crew, J.C. Penny, Modell’s sporting goods, Pier 1, Gold’s Gym, Fairway supermarkets, and most recently Hertz car rental. Who knows which ones will survive, but many have closed a multitude of their locations throughout the United States, laying off millions of workers and setting the stage for a huge reshuffling of how their businesses can be operated efficiently to be able to come back. It appears that Wal-Mart and Home Depot (they were considered more essential than real estate) have succeeded with everyone at home and ordering all their merchandise online from Amazon and many other online entities, which has given them a greater advantage.
Although Gov. Cuomo initially did briefly consider real estate as essential, he then rescinded his decision the very next day, making our our industry non-essential and just shutting us down. But he allowed us to do videos and virtual tours to market and sell our properties. My opinion is this decision was wrong when we could have had the necessary guidance in place to wear our masks, gloves,(and booties), and carry our disinfectant wipes and hand sanitizers. Could our exposure have been any worse than a big box enterprise?
How many clients would we have met at our properties — maybe one to three at most? Our liability would have been much much less than a store environment. Our current options to me haven’t really been very beneficial. We would have had more control over our clients (who would have been told to come prepared with masks and gloves or we could have provided them) than those who have been in the stores.
I have experienced firsthand some employees who weren’t consistently enforcing or requiring everyone to wear masks and gloves, putting that many more people in jeopardy of contracting Covid-19. Those leaving the stores were discarding their masks and gloves on the ground when trash cans were nearby, not caring about anyone else’s safety or health! Who would have cared more about the safety of the consumer, those in our real estate industries who work on a commission basis or a store employee earning a “somewhat guaranteed salary or wage per hour?
Shutting us down had a very serious impact on our incomes as well as buyers’ and investors’ ability to purchase capital goods, e.g. refrigerators, stoves, dishwashers, washer/dryers, etc. for properties that they would have bought. Our local and national economy, due to the lack of home sales and other businesses being closed down and the expenditures of the federal, state and local governments for Covid-19 casualties, have suffered immensely, too, and will have unimaginable consequences on our real estate taxes many years into the future. How many of our Realtors will have to declare Chapter 11 protection bankruptcy and what percentage of them will not recover to be able to come back into the business?
Only time will tell as to the ramifications of keeping us Realtors at home.
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has earned designations as a Graduate of the Realtor Institute (G.R.I.) and also as a Certified International Property Specialist (C.I.P.S). Just email or snail mail (regular mail) him with your ideas and suggestions on future columns with your name, email, and cell number and he will call or email you back. For a consultation, he can be reached by cell: (516) 647-4289 or by email: Phil@TurnKeyRealEstate.Com to answer any of your questions or concerns.