Life as we know it is rapidly changing as a result of COVID-19, and the real estate industry has not been immune from its effects.
As of midnight on March 25, new rules came into play banning open for inspections and public auctions.
But according to the experts, it’s still possible to successfully buy and sell in the commercial property market.
What do the changes mean?
In an open letter published on the Real Estate Institute of Australia (REIA) website, president Adrian Kelly called on real estate agents to “make significant changes” to the way they conduct their business, particularly in relation to inspections and public auctions.
How things were done in the past was no longer possible, he said.
“One-on-one private inspections by appointment must become the norm coupled with the appropriate safeguards as recommended by health authorities.
“With regard to public auctions, these can still occur via telephone bidding or by using one of the many online auction platforms available. We need to show some initiative and resourcefulness at this time.”
Auctions to now be held remotely or online
While auctions can no longer be held publicly, David Holmes, chair of REIQ Auctioneers Chapter, said in a recent Facebook video that they could easily be conducted remotely instead.
“We can continue to do auctions, they’re not banned, we’re just moving to a remote process,” Mr Holmes said.
“We’ve always been able to have telephone bidding and that can continue, or you might use an online platform.”
Mr Holmes said there was a variety of online platforms available, which would allow prospective buyers to bid from their home or office.
“The way it works practically is the agent and auctioneer might stand in the same office and look straight down the barrel of the camera,” Mr Holmes said.
“There might be an agent who is talking to a bidder on the phone and they may place a bid and the auctioneer and anyone watching online can see that.
“If it’s an online platform, the buyer may be able to put their bid in on their phone, iPad or device.”
He said these types of auction could still be a very efficient way to sell commercial property.
“There’s no cooling off with an auction contract.
“Secondly, it’s an unconditional contract. The auctioneer can sign the contract on behalf of both buyers and sellers on the day and effect that sale immediately so it’s actually a very swift process.”
Move to private inspections
Open inspections of properties can no longer be conducted, but prospective buyers can still contact an agent to make an appointment for a private inspection.
During an inspection, agents and potential buyers must adhere to social distancing guidelines, which requires keeping 1.5 metres away from others, and good hygiene.
“Commercial real estate is far less reliant on inspections than the residential market, as the buying decision is linked more heavily to returns,” said Luke Billiau, head of capital markets NSW for commercial real estate firm JLL.
“Auction rooms are already set up for absentee bidding and we are already seeing many owners choosing to sell via an expressions of interest process.”
Tips for commercial property buyers
Technology means that virtual tours are readily available for most commercial properties, negating the need to view the property in person.
It’s also possible to do plenty of background research about a property online, including: its location and surrounding infrastructure; the local demographics and foot traffic; its current tenancy situation; its design, layout and other features such as available carparking and lift access.
“Real estate service providers must be agile and adapt to current market challenges, with technology playing a larger role in providing real-time advisory to clients,” said JLL’s Mr Billiau.
“Our agents have already started utilising technology to provide a digital inspection experience, and have enhanced virtual asset tour capabilities, which is proving to be very beneficial to offshore investors.”
Will the process change again?
Depending on what help the government announces in coming days, the rules could change again.
However, Dan White, managing director of Ray White Group, is urging governments against shutting down the industry altogether.
“We need to be able to continue to provide the orderly completion of sales and purchases as well as property management, all of which will bode well for national confidence and lessen the shock to the economy,” Mr White said.
“It’s clear that many Australians still have a strong need to buy and sell property, regardless of the current situation.”
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