South Florida’s residential sales shift to virtual reality as business slows

Early this month, a buyer in Germany bought a Miami Beach house without ever setting foot in it. The $750,000 cash deal was done entirely using FaceTime and e-signature technology. It closed on March 11, the same day that President Trump imposed a 30-day travel ban from Europe and the World Health Organization declared coronavirus a pandemic.

The agents involved in the sale of the bayfront Normandy Shores home said the showings, inspection and walk-through were all done virtually, because the buyer purchased it as an investment and “didn’t need to see it.” The listing agents, Douglas Elliman’s Carol Cassis and Stephan Burke, and the buyer’s agent, Marion Ott, also with Elliman, said the sale is proof that deals can not only close virtually, but the whole process can be done online.

Cassis and Burke, like others, are hosting open houses virtually, especially as business grinds to a halt for many real estate agents during the coronavirus pandemic. Agents are blasting out emails encouraging buyers to take a virtual tour “during these times of social distancing” and even offering tips to staying productive while working from home.

A screenshot of an email from One Sotheby’s agent Alexandra Peters

Virtual deals

In the case of the Miami Beach home, though the buyer was not physically present, the agents were there. Someone had to show the house – multiple times, so that the buyer could see how the lighting hits at sunset – and during the inspection and walkthrough, Burke and Cassis said.

With FaceTime, buyers and agents can communicate in real time, said Ott. “Clients can ask questions. ‘Can you go into that bathroom again? Or, ‘Can you show me that closet again?’ It’s very real.”

The Normandy Shores home (Credit: Douglas Elliman)

Developers of luxury condos are also joining in on the virtual world. At Ritz-Carlton Residences, Miami Beach, Lionheart Capital is offering tours via FaceTime. Though sales centers are closed throughout South Florida, including at 57 Ocean in Miami Beach and Ritz-Carlton Residences in Sunny Isles Beach, virtual showings and closings can still occur.

The Estates at Acqualina in Sunny Isles Beach, which is under construction, is providing virtual tours of the model residence, walk-throughs, digital presentations and FaceTime conferencing with the sales team. The developer, Trump Group, is also offering online meetings with its lead designer to select finishes, and launching virtual amenities, including a virtual book club for brokers and clients.

OKO Group is among the developers tapping into technology to avoid a total shutdown in sales. At Missoni Baia in Miami’s Edgewater neighborhood and at Una Residences in Brickell, the developer is offering full video tours of the sales gallery and amenities, via YouTube, virtual meeting scheduling with agents, and online access to the floor plans for the projects under construction.

Edgardo Defortuna, president and CEO of Fortune International Group, which is handling sales for both developments, said that agents are still showing units at Fortune projects, but there are many fewer showings.

“If they come to see it now it’s because they’re very, very interested and could be signing contracts,” Defortuna said.

Fortune is prepared to market properties virtually because the firm is so active internationally, he added. “The presentations are all there. We just need to put it in a more consistent package. … The message is changing slightly to promote real estate and Miami as a whole as a very safe investment,” Defortuna said.

At Ritz-Carlton Residences in Sunny Isles, where closings began last month, the developer and sales team are planning to close on 30 units this week with virtual notaries. Buyers can send a representative to the walk-through, or they can postpone the walk-through and the developer will honor any issues they may have when the buyer can come to the property in person, Defortuna said.

Find me a deal

Amid the pandemic, fewer buyers made offers last week, according to Berkshire Hathaway HomeServices EWM Realty President Ron Shuffield. Yet, he said the company’s sales volume increased 30 percent from the previous week, likely due to buyers and sellers rushing to close due to coronavirus.

Shuffield, who’s still working out of EWM’s Coral Gables office, said the brokerage has been “pleased to see how many people are using our online tools and videos.” The company, like many others, is encouraging working from home and the use of web meetings and calls.

Shuffield does not anticipate a drop in property values, but acknowledged that there will be opportunities for buyers, comparing the health crisis to a nationwide hurricane “with no end in sight.”

Mortgage money in flux

Meanwhile, Centennial Bank, an Arkansas-based community bank with branches in Florida, is still closing new loans but it’s “becoming more and more difficult to do business,” according to David Druey, Florida regional president.

Druey expects that some would-be residential borrowers will see their mortgage rate locks expire as the coronavirus crisis continues. Most locks are only good for 30 days, and are dependent on a borrower’s employment status and income remaining the same.

“You’re seeing people start saying ‘OK, let’s take a pause here. I want to wait and see what this looks like,’” Druey said. “Every day is a new day. … Everyone had a different mindset a week or two ago.”

Now, residential brokers across the country have been getting standardized coronavirus-related legal language and addendums from their attorneys, title companies, brokerages and trade organizations to help buyers manage risk.

Closing agent Sebastian Jaramillo said he has several pending deals in the next couple of weeks that are up in the air, though some closings have occured. At least two deals have fallen through while they were in the due diligence period, according to Jaramillo, a partner with the Miami-based firm Wolfe Pincavage.

“The disruption was enough reason for a lot of people to back out,” Jaramillo said.

And he expects pricing to fall for residential properties. “Given the amount of small businesses or institutions headed to a decrease in income and permanent loss in revenue, a lot of people are not willing to purchase homes at this point,” he said.

Lending is still happening, with some lenders able to do remote closings, according to some developers. Yet overall, Jaramillo said the market is not set up for it.

Cycle shifts

Ana Bozovic, founder of real estate data firm and brokerage Analytics Miami, believes that coronavirus “has created an inflection point, and we are now in the early stages of this cycle’s decline.”

Bozovic is referring to the $500,000 and up condo market. “The higher up in price, the worse it is,” she said.

In January and February of this year, luxury condo sales (defined as $1 million and higher) in Miami Beach fell 53 percent compared to the same months of last year. At the end of February, the Edgewater market had 89 months of inventory of condos priced at $1 million and higher, based on two sales this year and 163 active listings, according to Bozovic’s data. In Sunny Isles Beach, there were 80 months of supply of $1 million-plus condos.

The silver lining? Sellers are already discounting their units, she said. A penthouse, unit 5103, at the Related Group’s Gran Paraiso in Edgewater is listed for just under $2 million. The owner bought it from the developer for $2.56 million in April 2019, which means that at the current asking price, the seller would be losing 22 percent, before commissions.

“It’s a genius move to buy real estate at the bottom. Especially in times of uncertainty, real estate has value. Miami is a wonderful, beautiful place. The opportunity for that is coming,” she said.

Defortuna and others agree that there could be opportunities down the line, but said it’s too early to tell, while the market takes a pause.

“There are going to be some opportunities in some cases where the developers or unit owners need to sell,” he said, adding that the developers his firm is representing are not slashing prices.

Price cuts will depend on the sellers, said Mark Zilbert of Brown Harris Stevens Miami. He doesn’t predict that pricing will drop, but said some sellers may find themselves with less cash reserves due to declines in the financial markets, and will be forced to sell their second or third home.

Zilbert, along with Silke Dietrich, represented the buyer of a $5.55 million condo at the Four Seasons Residences at The Surf Club, which closed on Friday. The buyer, who’s from Germany, wasn’t able to fly in for the closing due to the freeze on flights from Europe, but proceeded with the closing.

“I don’t think buyers are afraid of Florida,” Zilbert said. “I have been busy. I speak to buyers every single day.”

Correction: An earlier version of this story misidentified David Druey’s title.