The National Association of REALTORS® (NAR) put together their REALTORS Confidence Index, born out of a survey from more than 2,500 REALTORS across the U.S. The data from the Index revealed that 23 percent of closed or terminated contracts were due to delayed contracts.
That’s a pretty high and scary number when you think about it!
So what are some of the biggest problems facing all involved at closing? Some causes may not surprise you while others may seem like issues that have just cropped up in recent years.
For most, you, as a real estate agent, can help steer the transaction in a positive direction by understanding the issues and being proactive.
Causes of Closing Delays
The Index looked at nine specific areas from which the causes for delays in closing most likely occur. The results form the survey?
- Issues related to obtaining financing – 30 percent
- Appraisal issues – 21 percent
- Home inspection / environmental issues – 15 percent
- Titling / deed issues – 13 percent
- Contingencies stated in the contract – 8 percent
- Issues in buy / sell distressed property – 6 percent
- Home / hazard / flood insurance issues – 1 percent
- Buyer lost job – 0 percent
Other causes comprised 21 percent of responses while no problems encountered during closing comprised just 6 percent.
Looking at the Top 3 Issues
Financing shouldn’t be a big surprise, but as an agent, you can help your client be prepared. Be up front with your clients when discussing financing and refer them to a reliable mortgage lender to not only help obtain financing but also educate your clients on their particular situation.
Appraisal issues sometimes just can’t be avoided. This, apparently, is a growing problem due to several factors: a shortage of appraisers, off valuations and even appraisers who are not familiar with the local market. In this case, the best thing to do is to prepare your clients for the possibility of an unfavorable appraisal and what their options are.
Home inspection and environmental issues are another major problem. Some sellers may recommend an inspector, but if your client has a good referral or you trust an inspector who works with all of your clients, then you may want to employ his or her help instead.
No matter what the issue or how smooth the transaction may seem to go from the start, it’s important to prepare your client and educate them on what could go wrong and your game plan. It will give your clients peace of mind and help build a higher level of trust in you as their agent.