Last week we discovered some of the hold ups and glitches that keep a property from closing on time. We are going to continue on in that vein since the causes are many and being educated seems to keep the frustration level to a bare minimum.
I know everyone has heard that appraisals, or the lack thereof, have been a bone of contention for many a Real Estate transaction. Customers are sometimes shocked to find that the property is not appraising for what they thought and many times there are simply no available current comps to go by. The new Home Valuation Code of Conduct, or HVCC has further added to the delay, making it very difficult to do a quick close. These federal regulations that were meant to ensure the integrity of the appraisal process require that appraisers be assigned by a third party, such as an appraisal management company.
These appraisers are chosen from a list and are on a rotating basis. The problem arises when the appraiser is not even from the area and is not familiar with the area or the property type. The result is many times an appraisal that is way off base. I actually had this happen to me just this last year and the result was the closing fell apart and both sides of the deal. The appraisal was not a good one and the comps used were not very legitimate. The story ended on a happy note as we were able to renegotiate at a different price and move to close although the seller did not receive what he felt was a fair deal.
Another hurdle is the continued scrutiny of lenders doing securitized loans. There have been cases where the secondary market underwriter questioned the appraisal because it did not match up with the value on Zillow. I have had several customers that have called me wanting to know why my value of their property does not match up to sites such as Zillow. Many of these on line appraisal sites are not in keeping with our current market and should not be relied on as factual.
Another snag for closings is in the area of inspections. VA and FHA properties are especially troublesome in that some of the guidelines require that the seller do the repairs. Repairs required by VA appraisers can delay a closing because the work must be completed before the property can change hands. Another factor in a VA close is that the buyer can not agree to pay for the repair, which can be a snag if the seller can not or will not pay. In many cases, short sale or foreclosured properties must be purchased as an AS IS contract.
Whew! Are we closed yet? So as you can see getting the contract is just beginning of the race to close which can be sometimes feel more like an obstacle course. It seems that no matter how much you plan ahead it seems that closings are just taking longer than usual. The “new normal” seems to be 45 to 60 days from the date of contract.
Once again it has been great visiting with you and sharing information about this profession that I am passionate about. Please be sweet and patient with your Realtor and take a deep breath and jump smoothly over all the closing hurdles. Until next week make sure that you remember my get even philosophy; “The only people we have to get even with are those that have helped us.”
Karen K. Smith
“The only people we have to get even with are those that have helped us”