Abrupt return to work for some blowing holes in real estate deals
“Who would have been dumb enough to buy a house based on a temporary situation?” That question was recently posed on Inman Coast to Coast, a public real estate discussion group on Facebook. The answer, of course, is “lots of people.”
And now that the country is reopening and some companies are calling their employees back to the office, more than a few pandemic-inspired buyers are having a change of heart.
Christopher Paul of Keller Williams Realty in San Diego told the group his team has lost two deals in recent weeks: One buyer dropped out because his employer “abruptly changed” its work-from-home policies, while the other was a seller who was told he needed to be in the office more frequently.
Similarly, Todd Schroth of eXp Realty in Orlando had a buyer cancel a contract because his company suddenly wanted employees back in person. And Maui agent Kinga Mills of Hawaii Life had a cancellation shortly before closing because her buyer’s New York employer decided it “wanted everyone back in the office. Totally screwed my client.”
This shift in thinking is hardly universal; numerous agents posted that they haven’t noticed any recent slowdowns because of employment issues. Vija Williams of Keller Williams hasn’t seen it yet in her Seattle market. Ditto for Joy Triglia of Better Homes and Gardens in Fort Lauderdale. Mortgage specialist Jeff Chalmers of the Mortgage Network in Danvers, Massachusetts, hasn’t seen any slowdown on the financing side, either.
While a large-scale “return to the office” movement hasn’t materialized, some companies have clearly called their people home. “If you can go to a restaurant in New York City, you can come into the office,” Morgan Stanley CEO James Gorman said in June. “If you want to get paid New York rates, you work in New York.”
Other outfits — Amazon, Nationwide and American Express, among others —are allowing most of their employees to work from home. Still others have settled on a hybrid schedule where people work in the office a few days a week and at home on the other days. And some companies are still trying to figure out what to do.
According to a poll last month by trade publication Commercial Property Executive (for which I occasionally write), nearly two-thirds of a collection of realty firms, consultants, building owners and developers said their teams will be offered a hybrid schedule. But 35% said their entire workforces will return to the office full-time.
The Building Owners and Managers Association found similar results when it queried tenants in the spring. Nearly 8 out of 10 “decision-makers” told BOMA that physical offices are vital to their businesses. Perhaps that’s why the buying frenzy in the metro Detroit area is on the wane, offered Brandon Kekich of RE/MAX Dream Properties.
“People have changed their minds because of COVID drying up around here, and the Big Three (automakers) letting them know that the flex schedule will not last forever,” he posted to the Inman discussion group.
The employment factor was in play in a recent Fannie Mae survey, in which nearly two-thirds of respondents believe now is a bad time to buy and more than three-quarters said it’s a good time to sell. And concern about job security was elevated, even though more people expressed “greater confidence about their household income and job situation compared to this time last year,” said Fannie Mae Chief Economist Doug Duncan.
In Northern California, Tim Freeman of Vanguard Properties in Petaluma is working with a buyer who was searching for his “forever home” — one where he could live out his years. But the client recently changed his mind and is now looking instead for a weekend retreat in the wine country. Why? Because of “a change in work-related attendance,” said Freeman in the discussion group.
In Southern California, Angelique Kenney of Jason Mitchell Real Estate said she’s see “lots” of canceled deals. “The market is correcting itself,” she said. “It’s gonna be happening more.”
Matt Rillera, who works for the EntreTec consulting firm, said two of his family members recently canceled deals. One was in Louisiana and the other was in Sacramento, but both were tied to abrupt changes in the relatives’ work-from-home options, he said.
In Hawaii, Julie Chancerelle Ziemelis of MoveToHawaii365.com said, “People here are hoping that folks who bought homes (in the islands) during the pandemic, in the hopes of working from home for the foreseeable future, will be called back so we have more inventory!”
Sometimes, though, one person’s change of heart is another’s good fortune. In Dallas, Nicole Arenas of Keller Williams lucked out — or rather, her client did — when a buyer had to terminate an offer. The original buyer’s company was returning to the office three days a week, and he would no longer be allowed to work remotely. The location no longer worked for that buyer, but it did for Arenas’ buyer, who went under contract and closed on the deal.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
