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In the monthly REALTORS® Confidence Index Survey, the National Association of REALTORS® asks members “In the past three months, think of your most recent sales contract that was either settled/closed or terminated. Please explain how the deal concluded (settled, delayed, terminated, sale is pending, no contract signed).”
Among respondents who had a contract that went into settlement (on time or delayed) or was terminated over the period November 2016, December 2016, and January 2017, 29 percent had a delayed settlement, according to the January 2016 REALTORS® Confidence Index Survey Report, a monthly survey of REALTORS® about their sales activity and local market conditions.[1] Sixty-seven percent reported that the contract was settled on time, and five percent reported that the contract was terminated.
Among contracts that had a delayed settlement (29 percent), 38 percent faced issues related to obtaining financing and 22 percent faced appraisal issues. Regarding appraisal issues, respondents reported facing appraisal delays due to a shortage of appraisers, valuations that are not in line with market conditions, and “out-of-town” appraisers who are not familiar with local conditions. In NAR’s Survey of Mortgage Originators, 55 percent who took part in the survey reported some level of issues getting appraisals.[2] Other specific issues that led to delays involved titling, sale contingencies, problems related to distressed sales, home/hazard/flood insurance issues, and the buyer losing a job.
Based on information collected from the most recent sale of REALTOR® respondents ,the median days to close a contract was 40 days in January 2017 (40 days in December 2016; 42 days in January 2016). In July 2015 when NAR collected this information prior to the implementation of TRID/”Know Before You Owe”, the median days to close was 36 days.
Among contracts that were terminated (five percent), issues related to home inspections, obtaining financing, and appraisal were the major causes of termination.
[1] The author acknowledges Danielle Hale, Managing Director, Housing Research; Meredith Dunn, Research Communications Manager; and Amanda Riggs, Research Survey Analyst for their comments. Any errors are attributable to the author.
[2] Ken Fears, 2016 Survey of Mortgage Originators, Fourth Quarter, Economists Outlook Blog. See http://economistsoutlook.blogs.realtor.org/2017/02/07/survey-of-mortgage...
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