Company profile: Nelson & GalbreathApr 06, 2020 11:21AM ● By David Dykes
By Leigh Savage
The large white tents sit in the parking lot of Nelson & Galbreath in downtown Greenville, but the company isn't preparing for a spring party. The firm, which specializes in commercial and residential real estate law, is prepping for another day of outdoor closings in response to the COVID-19 pandemic.
Nelson & Galbreath did 50 “drive-thru” real estate closings the week of March 20 and expects those numbers to surge even higher, according to Jim Kyker, director of business development. “We’ll probably do 50 just on March 31,” he says.
The real estate industry is still humming, with no dip in sales visible so far, Kyker says, but threats loom on the horizon. Current closings are deals that came through two months ago, before the coronavirus created havoc through stock market tumbles, job losses, quarantines and social distancing.
Preparing for a real estate dip
The company is preparing for a dip in two to three months, when unemployment and other factors will likely catch up to the real estate industry.
Estimates released by the National Association of Realtors suggest that 2020 could bring a 10 percent reduction in overall sales - though the number could change considerably depending on how long it takes to eradicate the coronavirus threat.
The economic upheaval could be partially offset by current 30-year fixed mortgage rates hovering under four percent, which is driving sales and, especially, refinancing.
‘We’ve done way more refis than usual,” Kyker says. Those can be done in the new drive-thru system as well. The Federal Reserve cut interest rates by a half-percentage point in early March to shore up the economy and brace for the coronavirus’ economic effects.
Pending home sales rose in February, climbing for the second consecutive month, according to the National Association of Realtors. Each of the four major regions saw an increase in month-over-month contract activity, as well as growth in year-over-year pending home sales transactions compared to one year ago.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, grew 2.4 percent to 111.5 in February. Year-over-year contract signings increased 9.4 percent. An index of 100 is equal to the level of contract activity in 2001.
“February’s pending sales figures show the housing market had been very healthy prior to the coronavirus-induced shutdown,” said Lawrence Yun, NAR’s chief economist.
He noted that the data don't capture the significant fallout from the pandemic or the measures taken to control the outbreak.
“Numbers in the coming weeks will show just how hard the housing market was hit, but I am optimistic that the upcoming stimulus package will lessen the economic damage and we may get a V-shaped robust recovery later in the year.”
Lisa Williams, a real estate agent at Keller Williams, says she has seen a decline in showings, possibly because buyers who are “just looking” are staying home. “Everyone is nervous; we are mowing through sanitizing wipes,” she says. She doesn’t allow buyer clients to touch anything during visits.
Another challenge: the government recently changed minimum credit scores for government-backed loans, which caused several pre-qualified buyers to be denied qualification. “It’s been a strange few weeks,” she says.
A new approach
South Carolina real estate law dictates that buyers and sellers must get together with an attorney at closing, and as the pandemic unfolded, Nelson & Galbreath started putting buyers and sellers in two different rooms and asking real estate agents to stay home.
“We were disinfecting the rooms and all of that,” Kyker says.
As COVID-19 progressed and clients and staff became more concerned, the management team decided to take the next step to protect people by installing the tents.
The process is simple: clients drive up, an attorney comes out and hands them the paperwork, they sign and hand it back to the attorney, and then the attorney returns with a check and finalized papers. Clients can keep the pen - or use their own. “They never have to get out of the car or interact with other parties,” Kyker says.
Only about 10 percent of clients have said they’d prefer to go inside and conduct business in an office. While it has taken a bit of effort with more personnel shifting to outdoor closings - and the system is a bit less efficient for the staff - feedback from clients has been positive. “No one else was doing this,” Kyker says. “People appreciate the effort.”
Non-essential personnel working from home
While attorneys and some staff must stay on site to complete the closings, non-essential personnel are working from home and meeting via Zoom, and even on-site employees have switched to Zoom meetings to reduce interaction.
Kyker says he has seen a move toward more remote closings even before the coronavirus hit, and he sees a continuation of that once the pandemic subsides. “The longer this extends, the more permanent changes will come from this,” he says. “I expect more closings will eventually be done online, though it’s important to make sure the process is done correctly.”
Though residential real estate has been largely unaffected to date, his main concern is the commercial side, where he expects to see the impact of the coronavirus sooner. “Businesses might be on pause, not wanting to expand or open a new location.”
If that happens, Nelson & Galbreath will investigate federal and state programs that may be of assistance. “We’re looking into what would best help us,” he says. “A lot will depend on how business continues through the summer. It’s a new world every morning.”