Josh Peterson and Brittany Tiegen are no strangers to online shopping, but they never imagined they'd buy their first house that way.
"It's the largest purchase of our life and we never even set foot in it," said Peterson, who will close in early May.
The spring housing market in the Twin Cities has been turned upside down by the COVID-19 pandemic. Buyers are making offers on houses they've only seen on smartphones and laptops, sellers are readying their houses for sale with the help of virtual stagers and appraisers and mortgage lenders are putting together deals via FaceTime meetings and drive-through house closings.
"There's still a spring market, it's just happening virtually," said Kris Lindahl, a local broker.
Though real estate was deemed an essential service when Gov. Tim Walz announced the government shutdown on March 25, it's far from business as usual. Already the Minnesota Association of Realtors has called for a ban on open houses, and homebuilders put on hold their biggest marketing event of the year.
While home showings in the Twin Cities have plummeted in recent weeks and sales of upper-bracket houses are sputtering, first-time buyers like Peterson and Teigen are still in the market. Both work in financial services and got preapproved through an online application to spend up to $400,000, but opted to spend nearly half as much just in case their income declines.
The couple, who live in a rental house in Menomonie, Wis. with their four children, wanted to move closer to their jobs in the west metro. The day after Gov. Walz' executive order shutting down much of the economy to combat COVID-19, Jamie Molstad, an agent they met online, sent them a link to a $234,000 listing in Montrose that checked all the boxes. That evening Molstad drove to the house and, using her smartphone, took them on a 10-minute tour that the couple watched via Facebook video.
"Even though we were in the comfort of our bedroom," said Peterson. "It was just like we were there."
During the tour of the yard, Molstad even introduced them to a couple of neighbors who were outside.
"We could hear kids and all the sounds of the neighborhood," said Peterson.
Ten minutes later the couple messaged Molstad to make an offer. After a flurry of e-mails, including counteroffers and DocuSign documents, less than 12 hours later Molstad sent a congratulatory text saying the seller signed the offer.
Lindahl said virtual deal making has become increasingly common since mid March when the NCAA, NBA and other major events started announcing cancellations and Tom Hanks announced that he had tested positive.
"People could relate to Tom Hanks," said Lindahl. "They said, 'we need to change how we're living.'"
Lindahl immediately ordered a dozen 3-D cameras that his agents can use to do showings.
"That night, we made some quick decisions," he said. "I said we're going to change the way we do things."
That includes spending more money on marketing in hopes of attracting sellers who want to use the company's virtual staging services.
Zillow said last week that during the last week of March, 3-D tours were running at five times the typical week in February.
Johnny Fuerst, founder of JFuerst Real Estate Photography in Minneapolis, said he uses Matterport cameras that are capable of creating tours that let buyers experience nearly every square inch of the house. He said he's buying more equipment and hiring more staff. Views are up in part, he said, because people have more time to surf the internet.
"We have seen enough 3-D demand to double our capacity and we may increase it again if demand remains strong," he said.
Mortgage companies, home inspectors, appraisers and title companies are all embracing practices that were rare just a few weeks ago. Twin Cities-based Legacy Title, for example, is doing curbside closings at all 12 of its offices, and also offers drive-through closings at its Blaine office, enabling buyers to attend closings while sitting in their cars.
"We recognized immediately that this situation would cause a shift in the traditional way of doing closings," said President Connie Clancy in an email.
Chris Galler, president of the Minnesota Association of Realtors, said that while many of the adaptations will endure long after pandemic is over, a virtual real estate market isn't without risk. After all, he said, buying a home online far more complicated than buying a pair of pants on Amazon.
"You can't really return a house," he said.
Peterson said they only had second thoughts after writing a check for the earnest money for a house they never saw in a community they'd never visited. They visited the house with their four kids for the first time more than a week after sealing the deal, and say they felt even more confident in their decision.
"Literally everything fell in place," said Peterson. "But we did have a moment where we said 'Is this really happening?"
