Many real estate agents are still struggling, and one good reason could be the new hurdles in closing deals.
Despite the indications that the housing market is starting to recover, almost one-third of deals experienced contract cancellations this past February. That’s almost triple the amount from last year.
The top three reasons deals aren’t closing are:
• Appraisals are below contract – Often, appraisers hired by the banks are being brought in and appraising the value of the home that is drastically different than the amount agreed upon by the buyers and sellers. This can stem from a number of different factors — the appraiser might be inexperienced or unfamiliar with local pricing; the appraiser may be comparing non-distressed homes to distressed homes for local pricing; and appraisers trying to get potential buyers to fix repairs or deal with existing liens before a title can be transferred.
• Documentation and underwriting requirements have become VERY conservative (especially through the FHA, Fannie Mae and Freddie Mac) – These include the already well-known super-high credit score minimums, substantial down payments, and the ever-increasing amount of paperwork for mortgages. But agents must also be aware of the latest obstacles. For instance, recent FHA changes for loan applicants now require people with collections accounts in their credit folders to set-up a required repayment plan which can kill the deal during the process.
• Lack of or poor service by lender staff – Loan processing and other forms often fall in the cracks as deadlines come and go, which can further delay the closing.
The bottom line for agents: be on top of your transactions. Stay up-to-date on all changes made at regulatory agencies and any local rules that are in place where your deal is. Agents can help themselves stay clued-in simply by keeping track of deadlines and staying in communication with the lending, escrow, title and real estate professionals involved in each transaction.
For more information on this story, click here.