As the coronavirus continues to sweep the nation, many small businesses are beginning to close their doors for good. However, some have managed to survive and even thrive in the midst of chaos. By developing new ways to engage with and help customers during this time of social distancing, organizations across the country are continuing to serve their communities. Often, this involves incorporating local delivery services — something that applies to more than just restaurants.

Meet customers where they are by investing in delivery. Bring products customers love and need right to their doorstep. Doing so may mean the difference between remaining open and shuttering your doors for good.

Find a Delivery Vehicle

If your small business sells larger items like framed art or plants, you may need to find a larger vehicle than your sedan or SUV. Moreover, if your company specializes in health and wellness products or cleaning supplies — which are in high demand right now — your delivery loads will likely be quite large. Likewise, you’ll have to find an alternative mode of transportation.

Cargo vans, box trucks and pickup trucks are likely the most affordable and viable option for your organization. Additionally, it’s best to choose a fuel-efficient vehicle, such as the 2020 Chevy Silverado, a diesel truck that gets 33 miles per gallon on the highway. You might consider purchasing a car instead of renting one. Although you may use it less once the pandemic lifts, your customers will appreciate ongoing delivery as a new feature.

Always Drive Safely

Of course, you may not be able to afford a large vehicle in light of current circumstances. In this case, you may opt to purchase a trailer that you can tow with the car you already own. Consult your vehicle’s user manual to determine how much weight yours can manage. Then, purchase or rent a trailer based on the towing limits, hitch it to your car and load it up.

Keep in mind driving with a trailer behind you requires a bit more caution than merely driving your car or truck. If you take a turn too quickly or swerve, your trailer can whip back and forth like a happy dog’s tail. Thus, it’s best to practice driving with an empty trailer first. Try pulling in and backing out of driveways. Check your trailer’s clearance and perform wider turns to avoid hitting other vehicles.

Map Your Route

While you may want to plan your delivery route with an excel spreadsheet, sticky notes and maps, creating a course by hand is far from the best option. Many routing software and mapping programs are available — why not take advantage of them? The best ones will log fuel expenses and driving habits and offer the most efficient routes to improve your return on investment.

While most routing systems do cost money, optimizing your route will save on fuel, speed up your delivery process and create satisfied customers. As a result, your earnings may offset the cost. Plus, a few big names in routing are offering discounts on their services to support small businesses amid COVID-19.

Promote Business With New Perks

To jumpstart your new delivery service, you might offer your loyal customers a few perks. These incentives may include same-day delivery for an extra fee, free shipping or bonuses like stickers or decals to rep your brand. You might also incentivize purchases by rewarding those who spend a certain amount of money with an in-store gift. This benefit will encourage customers to begin visiting your store once your doors open again.

Last week I did a combined monthly/ weekly update which indicated that by the end of March the impact of the coronavirus contagion was already fairly severe – at least in terms of contract and listing activity. The Chicago Association of Realtors released their updated numbers for the week ending April 4 yesterday morning and it continues to show a pretty bleak picture.

Contract activity

• Single family home activity fell from 318 last year to 172 this year. That’s a 46% drop.
• Condo and townhome activity fell from 517 to 195 which is a 62% drop. Wow!

Listing activity

• Last year there were 528 new single family home listings compared to only 255 this year. That’s a 52% drop.
• Last year there were 971 new condo townhome listings vs. only 352 this year. That’s a 64% drop. Ouch!

Let’s take a look at how all of this affected inventory:

• Last year there were 3168 single family homes for sale compared to only 2796 this year. That’s only a 12% decrease.
• Last year there were 5277 condos/ townhomes for sale but this year it dropped to 5002, which is only a 5% decrease

You’ll notice that these percentage decreases are much smaller than the percentages I was throwing around earlier. The reason for that is that the available inventory is comprised mostly of listings that have been around for a while and their number has not changed much. So you have 352 new condo listings on a base of almost 5000 units.

What we really want to see is how much inventory is available relative to contract activity so we need to look at weeks of supply – i.e. at the current sales rate how long would it take to sell through the current inventory? This is not something I have looked at before with this data.

• For single family homes we had a 10 week supply last year but this year we have a 16.3 week supply. OK. That’s not good.
• Unfortunately condo inventory is way out of control. Last year we had a 10.2 week supply which has ballooned this year to a 25.7 weeks which is totally outrageous. I didn’t do this calculation last week but it I just checked and it came out only slightly lower than this number.

The bottom line is that the real estate market is not nearly as balanced as I thought at the end of last week and there appears to be more stress in the condo market – possibly because lower priced buyers have less financial cushion than the single family home buyers. Just a theory. And the reason I didn’t notice this last week was that I was looking at monthly data which did not fully reflect the impact of our sequestration. The bottom line: It’s going to be damn hard to sell a condo in this environment.

Contract Cancellations

It will be quite a while before I have actual data on this so I’m basically working off of anecdotal information. From what I’ve surmised there was a flurry of contract cancellations in the first couple of weeks as the financial markets went to hell without warning and people had no idea what was going on. However, since then there are far fewer cancellations because a higher percentage of the contracts out there were entered into after things got hairy. So the parties entered into these contracts with full knowledge of the current environment.

Also, there are now boilerplate Covid-19 addenda to real estate contracts available which provide for extensions and even cancellations in the event that the outbreak causes a delay or an inability to close respectively. Some attorneys are adding similar language into their attorney review letters. Buyers, sellers and their attorneys need to be careful what they agree to because some of these addenda are less precisely crafted than others. For instance, the addendum provided by the Mainstreet Organization of Realtors provides that either the buyer or the seller may unilaterally extend the closing or even cancel the contract if a government body, their business, or their employment is interrupted by a government response to the outbreak.

The Mortgage Rate Environment

Mortgage interest rates are still very flaky right now. Check out the graph below to see how much fluctuation there is from one day to the next. I’ve had mortgage brokers tell me that a single lender might offer a really low rate for a very brief window during the day and then raise the rate without warning once they have enough applications to fill their pipeline. So don’t believe people when they tell you that mortgage interest rates are at all time lows. Maybe they are. Maybe they aren’t.

Mortgage rates remain highly volatile

#RealEstate #ChicagoRealEstate #Coronavirus

Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.