Information about the stages of a real estate project during lockdown
Have you initiated a real estate acquisition project and couldn’t finalize it before the start of the lockdown? Here are some tips for moving forward or completing your purchase despite the Covid-19 health crisis.
1 – Preliminary Consideration: Get a Head Start
Use the free time you have during this lockdown to your advantage by scouring real estate listing websites, exploring the surroundings on Google Street View, and researching the cities in question.
You can also contact real estate agency networks even though the agencies remain closed to the public. “Associates and collaborators are organizing to continue providing telephone reception and ongoing case management.”
You can also email your banker to inquire about financial assistance. However, the response time could be lengthy, as banking services prioritize emergencies.
2 – Active Search for the Perfect Property: To Be Postponed!
- Gathering information and doing preliminary research, yes. Actively searching, no. You won’t be able to visit targeted properties before the end of the lockdown, so you’ll have to settle for reconnaissance work.
“The market is completely at a standstill, and there’s currently no movement in prices,” summarizes Laurent Vimont, President of Century 21 France. He emphasizes that the market is in a “pause mode,” with uncertainty about when it will resume. If you haven’t yet decided on the property to purchase, you’ll have to wait…
3 – Offer Accepted: A Challenging Journey Ahead
Did you find that elusive gem before mid-March? Well, that changes everything! “If it’s truly the home of your dreams, there’s nothing stopping you from going through all the stages of the purchase,” emphasizes Laurent Vimont. “Everything is currently longer and more complicated, but everything is possible. Real estate acquisition is often compared to an obstacle course: this time, it truly is an obstacle course.” The President of Century 21 France also emphasizes that the current period is no longer favorable for “impulse buying.” If you’ve found your dream house, negotiations can potentially be conducted remotely. Just like the sales agreement: “If the purchase offer is accepted, you can move on to the next step, signing the compromise, with electronic signatures,” adds Laurent Vimont. If you’ve already set a price and your proposal has been accepted, don’t forget to extend the timelines in the sales agreement: it’s advisable to request an extension of the loan contingency period to 90 days. And if an essential document is missing from the file ?
However, if essential elements are missing from the sales file, the transaction could be temporarily compromised. For instance, if a report (energy performance, lead, condition of gas and electricity installations, dry rot, risk and pollution assessment, etc.) is no longer up-to-date, the seller will need to have it redone. Real estate assessors, in fact, suspended all activity in mid-March following government recommendations. Similar to the construction sector, a gradual resumption has been underway since early April, as detailed by Lionel Janot, President of the Interprofessional Federation of Real Estate Assessment (FIDI), on their website. If your file is stuck, hope is still on the horizon… even though patience is required.
4 – Signed Sales Agreement:
Persevere, from a distance. If the compromise or sales agreement is signed, it’s important to connect with the real estate agent to discuss the necessary steps, extended timelines, and upcoming stages. This is because certain documents (like the mentioned diagnostics above) might expire by the time the final sales deed is signed with the notary. Extended withdrawal period and preemption right.
The usual withdrawal period is 10 days for signatories of a preliminary real estate acquisition contract. The municipality’s right of preemption is 2 months. However, one of the ordinances from March 25th suspends these periods until the end of the state of health emergency. The implication is that if you signed a preliminary contract (promise or compromise) before March 12th and the 10-day withdrawal period was completed by that date, then you cannot reverse the decision. Otherwise, you have all the time to contemplate this acquisition.
5 – Mortgage Loan Application: Extended Timelines.
On the bank’s side, the general directive is: “we are processing priority cases.” In theory, an ongoing mortgage loan application falls under the category of priority cases. However, you should be prepared for potential extended delays here as well. And consider being more flexible with your interest rate expectations: “The priority is to secure your loan,” explained Meilleurtaux spokesperson Maël Bernier at the end of March. “Today, lowering your rate from 1.35% to 1.10%, for example, shouldn’t be the focus anymore: for a €200,000 loan over 20 years, it would only save you about fifteen euros per month, while you might simply risk not getting your loan on time!” Moreover, brokers have observed slight increases in interest rate scales, around 0.25 points: an increase confirmed on Friday, April 10th, by Philippe Brassac, CEO of Crédit Agricole SA, on BFMTV. He emphasized that the increase is implemented without “any additional margin” for the banks.
6 – Notary Signing:
A Unlocked Finalization The government relaxed the rules applicable to notarial deeds by decree on April 3rd, adapting them to the coronavirus health crisis: you can now sign the authentic deed remotely, using video conferencing and electronic signatures. Laurent Vimont of Century 21 welcomes this measure while emphasizing that “the signing of the authentic deed is only the final step of the purchase.”
7 – Moving: To Be Postponed, If Possible
Finalizing a purchase is challenging… but possible! However, it’s best to allocate a significant buffer for planning the move. In short, moving is prohibited except for cases “involving health, social, or peril emergencies.” And if you cannot postpone your move, you need to have a specific certificate on hand.