Realtors, renters and landlords adjust to an uncomfortable new normal
MISSOULA — A week after Gov. Steve Bullock issued a stay-at-home order designed to slow the spread of COVID-19, the Montana Association of Realtors got on a conference call with the organization’s leaders across the state. Realtors wanted to know how to help people move when movement is restricted.
While similar orders in California and New York have designated real estate activity as nonessential, and thus subject to stay-at-home directives, Montana’s order defines real estate as “essential” and, as such, unrestricted.
Predictably, questions about how to conduct business during a pandemic have multiplied. What are best practices for keeping clients and colleagues safe? What does the new, if temporary, normal mean for the market? And how do renters — particularly those living in homes that are up for sale — fit into the picture?
MAR President Diane Beck said in an interview that it’s the association’s job to provide updated information to its 4,800 members, but it can’t enact or enforce policy for individual real estate agents or brokers.
“Our role is not to necessarily help interpret law or directives,” Beck said. “It’s more to give guidance in terms of available resources. This is a moving target, and there’s a lot coming out of the governor’s office that may not be clear to the consumer. Everybody in the state is scrambling to try to figure out what to do.”
Some real estate agents concerned about public health or contracting the virus themselves have put their businesses on pause.
For those still working, providing real estate services in largely shut-in communities is requiring flexibility, especially in terms of timing. MAR has drafted language for agents to use as a contract addendum allowing for delays in financing, home inspection, and title insurance.
“Everybody is kind of hunkered down, so everything is taking a little bit longer,” Beck said.
Most people who are now buying houses in Montana either have to move for job relocation, are downsizing, or are moving closer to family, she said.
“In general, it’s not a normal spring market,” she said. “There aren’t a lot of people out shopping for houses like they normally would this time of year.”
David Loewenwarter, of Berkshire Hathaway HomeServices in Missoula, said he sees uncertainty on every front of Missoula’s housing market.
“The sellers are skittish from the perspective that they’re anxious about people coming into their houses,” he said. “And buyers, from the perspective of being really concerned about their employment and loss of wages and how that’s going to impact their ability to actually buy a house.”
COVID-19 has also changed how real estate agents do their work. In late March, Loewenwarter did a walk-through with a client that sounds like something out of a military counterintelligence handbook.
“Everything we touched, when we touched something, was with a wipe, not our hands,” he said. “We wiped the keys to go in, the doorknob to go in. We wiped the keys to go out, the doorknob to go out.”
On-the-job safety protocols are up to individual agents or brokers. Loewenwarter said he knows of at least one local real estate agent over the age of 60 who has decided to cease business until the crisis subsides.
Brint Wahlberg, of Windermere Real Estate in Missoula, is seeing changes as well, including “a strong encouragement to look at virtual tours and video tours before actually seeing the house,” he said. “I’ve noticed some agents saying ‘no showings until we accept an offer from you.’ That’s bold.”
Pre-pandemic, Wahlberg said, only a small percentage of local realtors deployed virtual tours. “Now it’s the centerpiece of how we’re presenting houses.”
Wahlberg said he is seeing mostly local and regional buyers, rather than out-of-state [clients], which is unusual for the season. He doesn’t see a buyer’s market developing in the short-term, but if the pandemic lasts for months, or if stay-at-home orders persist, that could change. Missoula’s housing prices have been rising for years. The pandemic could end up equalizing the market a bit, he said.
“If we’re back to social distancing in June? If it’s multiple years? Then all bets are off,” he said.
In the meantime, Wahlberg is trying to be creative in a shaky market. He currently has a listing in Missoula’s South Hills, written by one of his employees, that reads: “This spacious Farviews home on a downhill lot provides amazing views, a work-from-home and home-school friendly layout, and a fully finished 15′ x 30′ shop that can serve as a man cave/she shed/gender nonconforming relaxation area/quasi-secure bunker for the zombie apocalypse … use the shop for overflow, or for your woodworking or craft projects, or for your post-quarantine block party.”
Renters residing in homes that are on the market can find themselves in a particular bind. Even as some real estate offices closed to protect their staff, some Missoula agents continue to schedule walk-throughs for potential buyers. Many real estate companies by policy provide 24-hour notice to renters before agents can walk strangers through their space, but in the midst of a pandemic, the issue isn’t privacy — it’s safety.
“There are some renters that have said, ‘I’m absolutely not opening my house to anyone,” Beck said. “And, I mean, at this point in time, I don’t know of anyone who’s going to argue with them. Whether it’s their personal health or the potential of somebody walking through their house with the coronavirus, there’s just so much unknown right now.”
On social media and in interviews with Montana Free Press, several renters who asked not to be identified expressed frustration with agents who are still hosting walk-throughs despite stay-at-home orders from the governor’s office. Some of those renters have family members working in the health care system, or are in contact with older family members, or have compromised immune systems.
Whether they are at home at the time or not, renters have little control over how walk-throughs are conducted, and the power dynamic between landlords and renters can be tricky.
In most of these cases, renters reported being able to come to an agreement with agents and landlords to postpone walk-throughs. Still, renters noted, those negotiations were conducted on an individual basis, without recourse to a guiding policy to protect tenants who may not have the wherewithal to negotiate.
There’s no blanket policy for realtors during a public health emergency. The National Association of Realtors’ 2020 Code of Ethics mostly applies to business relationships between Realtors, sellers, and buyers. The code addresses tenant rights under Standard of Practice 1-10, which says realtors shall “competently manage the property of clients with due regard for the rights, safety and health of tenants and others lawfully on the premises.”
Coronavirus: A Guide for Realtors is a new nationwide industry document produced by NAR that’s being updated as the pandemic unfolds. In early March, it said nothing about tenant rights, but by mid-March it had been updated to include guidelines on open houses and walk-throughs. It says agents should not do walk-throughs in homes where tenants are quarantining. But in the case that a tenant refuses a walk-through for other reasons, the guide recommends that agents consult the lease for guidance, ask for documentation that the tenant has recently traveled abroad, assure tenants that safety precautions will be taken, or negotiate a virtual tour.
“Generally speaking,” the guide states, “the tenant does not have the ability to prevent showings.”
TENANTS AND LANDLORDS
Missoula’s rental market is having an unusual spring as well. Renters are mostly staying put.
“It’s been really quiet,” said Paul Burow, general manager at Missoula’s Professional Property Management. “There’s a lot of uncertainty.”
Burow said PPM has received lots of questions from suddenly unemployed renters about converting longer leases to month-to-month contracts. That’s a negotiation that can and does happen under ordinary circumstances, but on a large scale, he said, it creates risks for the management company.
“If everyone goes month-to-month, we might get stuck with a lot of empty places by Thanksgiving,” Burow said. “And because we don’t own the properties — we just manage them — we have to keep the owners’ best interests in mind, too.”
On Tuesday, March 31, Gov. Bullock’s emergency order to suspend evictions, foreclosures and utility disconnections went into effect. The order has since been extended to April 24.
On April 8, Helena attorney Dale Schowengerdt, representing the Montana Landlords Association, wrote Bullock requesting that the governor either cancel the emergency directive or “establish a fund to assist Landlords experiencing financial distress because they are not receiving rent under the directive.”
“The Directive does not differentiate between people impacted by COVID-19 and those who are not, and, as it stands, people who are fully employed are not paying rent,” the letter says.
Burow said he didn’t see much of an increase in unpaid rents in April — it will be May, after tenants have been unemployed for a few weeks, when renters may begin to have trouble paying their bills, he said. Like many landlords, Burow uses income from his rental properties to pay his mortgages, and he’d like to see financial relief in the form of mortgage deferments from banks and a state suspension of property taxes.
Some commercial property owners have already gotten temporary relief from their banks. Sherri Davidoff, who owns a building in downtown Missoula, said First Security Bank proactively offered to defer four months of mortgage payments, no questions asked.
“That gives landlords the flexibility they need to offer deferred rent to their tenants, and helps businesses conserve cash during the crisis,” Davidoff said. “This is exactly the kind of practical, community-oriented support from our banks that has really helped to grow Missoula over the years, and now it will also help us get through these tough times.”
Other Missoula businesses are looking to the Coronavirus Aid, Relief and Economic Security Act’s $349 billion Payment Protection Program, which provides forgivable loans to businesses for payroll, rent, mortgage interest and utilities, as long as most employees are kept on payroll for at least eight weeks.
Among Missoula’s tenant advocates, pandemic issues have highlighted a philosophical divide. A group of tenant-rights activists recently broke off from a local online community that was offering mutual-aid resources for struggling Missoulians. The group had been discussing the prospect of a rent strike, and arguments about housing as a human right came into conflict with questions about how landlords — especially individuals — could expect to make a living if rent isn’t paid.
Rent Strike Missoula started its own Facebook page to promote the idea that renters should be able to stay in their homes regardless of ability to pay. In an emailed statement, the group said pandemic impacts on tenant-landlord relations shine a light on larger issues of housing insecurity:
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“Ultimately the risks coupled to these investments are owned by the landlord exclusively, just like the property itself,” they wrote. “It is common right now to hear landlords proclaim that ‘my renter should have had a rainy day fund’ for situations such as this. Many renters are currently and validly asking the same questions of their landlords. Both groups are more aware than ever of how flimsy financial security really is under capitalism; we argue that this is cause for solidarity.”
The group is asking landlords to refuse to evict renters for non-payment, and the state to provide a solution. The governor’s eviction suspension could be extended again. But even if rent is deferred, low-income workers who are now unemployed aren’t likely to be accruing funds to pay back rent later.
“We want to see the federal government use taxpayer money to keep taxpayers housed and healthy instead of bailing out banks and corporations,” Rent Strike Missoula stated.
Bozeman-based nonprofit Tenants United MT is helping organize renters rights groups statewide. Executive Director Zachary Krumm said he’s not advocating a rent strike — yet.
“It’s a tactic [for] when nothing else works,” he said. “I’m not advising self-initiated rent strikes, but it can be a long-term solution to put pressure on, just like what unions do.”
Based on Census data and average per household occupancy, Krumm estimates that roughly 320,000 Montanans live in rental housing. With almost half of renters paying at least 30% of their gross income for housing, and unemployment trending up dramatically, he said, “10,000 looks like a conservative estimate” for the number of Montana renters at risk of eviction.
In Krumm’s view, the pandemic is exposing existing flaws in housing systems.
“It underscores the fact that housing crises are the norm, and have been for a very long time,” he said. “If nothing else, we should see this as a moment. Renters are your service workers, your grocery store workers, and they are now about as important as health care workers. They are people we should be looking out for.”
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