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Unintended consequences with the new normal in real estate

Another new hurdle for home sales and purchases in Southern Litchfield County, CT.

Litchfield County CT real estateWe are seeing another new hurdle arise as lenders tighten their grip. I recently wrote about mortgage extensions becoming the new normal in real estate, and it is causing even more issues to crop up in home sales. 

Muliple extensions are asked for and granted, the closing date looms large in front of both buyers and sellers, however it is unclear if they will indeed get their mortgage. Sellers get very, very nervous and buyers are on the edge of their seats.

Will everyone be moving after all? 

Some sellers are hesitant to order movers, and this takes time and a coordinated schedule. Many times they have a purchase that needs to be coordinated with the sale of their property.

Buyers need to know when they are moving, for many obvious reasons!

What do you mean I have to move out by the end of the week? Yesterday they hadn't even gotten a commitment for their mortgage? 

The mortgage contingency is finally met... and a clear to close comes. What could be wrong with that? There is no time for planning. The buyers lender expects the house will close in a very short period of time after they issue that clear to close. 

Sellers are left scrambling to get moved out. Their frustration mounts even higher at a time when they are already frustrated enough by all the delays caused by the lender. 

Buyers are left scrambling to get moved in at the last minute. They may have had to pay another rental payment, mortgage payment due to all the extension requests. Perhaps rate locks are now set to expire, this closing must happen on time!

This seems to be especially true for certain loans like CHFA and USDA. 

Emotions run even higher and anger levels can increase. 

Keeping the real estate ball moving these days can be an ever increasing challenge. There are many unexpected and unintended consequences with the new normal in real estate. Buyers and sellers both need to be totally aware of these bumps and twists in the road for sure. 

Andrea Swiedler, Realtor, Southern Litchfield County Real Estate

2017 President, Greater New Milford Board of Realtors

2017 Connecticut Magazine 5 Star Realtor

 

 Search homes for sale in Litchfield County, CT.

 

Coldwell Banker Residential Brokerage

Litchfield County Regional Office,375 Danbury Rd, New Milford, CT 06776

 

© Andrea Swiedler 2009 - 2017

 Always do right. This will gratify some people and astonish the rest. - Mark Twain

Comment balloon 107 commentsAndrea Swiedler • September 04 2013 05:12AM

Comments

It can be a challenge these days to get the clear to close, that is for certain.
Posted by Carol Zingone, Global Realtor in Jax Beach, FL - ABR, CRS, CIPS (Berkshire Hathaway Home Services Florida Network Realty) about 7 years ago

Carol, and once is comes, sellers are left scrambling. 

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 7 years ago

Dean, Dean, stop the world, I want to get off!  Crazy, isn't it.

Posted by Roger D. Mucci, Lets shake things up at your home today! (Shaken...with a Twist 216.633.2092) about 7 years ago

Roger, Roger, last night I felt that way for sure! 

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 7 years ago

Andrea, I am living that misery right now with 2 of my buyers. For one, the house is vacant, but it is dragging out. With the second,  the seller needs to rent a storage space and we are waiting, and waiting, and waiting.

Posted by Ed Silva, Central CT Real Estate Broker Serving all equally (Mapleridge Realty, CT 203-206-0754 ) about 7 years ago

Ed, it is so tough. I have sellers that refused to pack up because they believed the multiple extensions indicated the buyer would not get the mortgage. Another deal where I had the buyers was torture even though the home was vacant. The sellers agent was on my back on a daily basis.

Both times sellers wanted to put the house back on the market on a daily basis!

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 7 years ago

This is so true these days in real estate.  I live in an area that has a joint Air Force and Army base and through in the uncertainty of orders being cancelled and you are headed on an emotional train wreck for buyers and sellers. 

Posted by Kim Peasley-Parker (AgentOwned Realty, Heritage Group, Inc.) about 7 years ago

You are making a great case for using a purchased based mortgage banker with local processing.  Control of the transaction is everything. The problem is buyers get qualified or cross qualified with a local lender and then find out they can save a few dollars with the broker up the street that is starving becuase refis went away. Realtors must insist buyers double app with  a quality local lender. 

Posted by Matt Brady, The Mortgage Answer Man (Finance Of America) about 7 years ago

I am thankful that doesn't matter quite as much in my market.  Once in a while we have an occupied home, but mostly no... less to love and easier to do it when it's a second home. 

Posted by Tammy Lankford,, Broker GA Lake Sinclair/Eatonton/Milledgeville (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) about 7 years ago

Process has been a problem for years. Once appraisal is done it should be a done deal.

Posted by Edward Gilmartin (CRE) about 7 years ago

Kim, it is like a train wreck. You can see it coming but can't do anything about it. No matter how you try to calm them down and help them to prepare.

Matt, sometimes it is unavoidable with these programs for first time home buyers. In both most recent cases they were using a very reputable mortgage banker. 

Tammy, you are right, but it can still cause panic with the seller. Are they wasting valuable time, is it going to close... 

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 7 years ago

Edward, it is just not the case, sadly.

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 7 years ago

Andrea, there can be many reasons for a delay.  It could be third party vendors over which we have NO control.  It could be the buyer is dragging their feet in providing documents, it could be the agents have returned signed addendums to the contract.  Those that are organized and follow instructions get the deals closed on time.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) about 7 years ago

We have to keep on top of the lender to get a full loan commitment most of the time.   There are many reputable lenders that will get the loan completed and a clear to close and wait until closing time.   It is one thing when it is a lender we recommend, but a total nightmare when we are on the listing side.   Luckily, we have a full time licensed assistant that focuses on the status of the loans and title work and makes sure everything is moving forward or altering us if it is stalled.   One of the best things we use is a rent-back....sure, it is more work for us, but a better result for the seller.

Posted by Yvette Chisholm, Associate Broker - Rockville, MD 301-758-9500 (Long & Foster Real Estate, Inc.) about 7 years ago

The longer the extension, like life support and being in a coma, the patient can fade away. Critical steps to keep the process moving, that's what we do with the taser, stick and carrot. That's what it's all about. Hey.

Posted by Andrew Mooers | 207.532.6573, Northern Maine Real Estate-Aroostook County Broker (MOOERS REALTY) about 7 years ago

Kathy, certainly there are many different reasons, it is frustrating for all. The issue of a moving date for the sellers as these extensions mount up then all of a sudden there appears a clear to close creates quite a new set of issues. 

Yvette, although I can do my best to keep on top, in CT we use attorneys for closings. Too many cooks in the kitchen also causes problems. 

Andy boy is it like life support! 

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 7 years ago

Andrea, this doesn't happen too often but it can! I'm currently working with buyers who moved from NY four months ago, most of their furniture is in storage, they're living in an apartment waiting for their house to close in NY. It was originally set to close in May, here we are in September!

Posted by Beth Atalay, Cam Realty of Clermont FL (Cam Realty and Property Management) about 7 years ago

Andrea, I think the answer is to use the smaller, local lending institutions.  They are not nearly as wiggy when it comes to deadlines and getting the settlement done.

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) about 7 years ago

Anita, I cringe now the last 2 weeks for my clients as so much has to be coordinated and the banks/lenders are very lax at times.  It comes down to a day before sometimes and tempers fly...that is why I love cash sales which half of mine have been this year.

Posted by Ginny Gorman, Homes for Sale in Southern RI and beyond (RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate) about 7 years ago

Andrea - thanks for sharing this. I think if these lending institutions would for once put themselves in the shoes of the consumer, this type of thing would not be happening. I'm with Patricia #18 on this - best to stick with your local lenders. 

Posted by Jeff Stevens, Jeff Stevens, Associate Broker/REALTOR (Berkshire Hathaway HomeServices New Mexico Properties) about 7 years ago

Real Estate is forever changing, this is a great example of how. I knew about everything you mentioned, but never gave it any thought on how much it effects the deal on both sides.

Posted by Chuck Mixon, Cutler Bay Specialist, GRI, CDPE, BPOR (The Keyes Company) about 7 years ago

Beth, we are seeing it more and more and it is frustrating for all.

Pat, in many cases such as USDA and CHFA it is just the new norm. We can't use a local lender in some cases. 

Ginny, half of your sales, wow! I am stunned!

Jeffrey, and when it isn't possible it is so hard for all involved.

Chuck, it can cause horrible issues. 

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 7 years ago

I am facing it again right now on a home that was supposed to close this Friday and the bank is moving backwards nevermind slow. I find goving them mor etime doe snot result in them having enough as always teh week before, they come up with all kinds of new things. 

Posted by Scott Godzyk, One of the Manchester NH's area Leading Agents (Godzyk Real Estate Services) about 7 years ago

It's such a headache to deal with not being able to know set dates. It's almost like everyone should live out of a storage space until actual closing!

Posted by Suzanne Otto, Your Montgomery County PA home stager (Six Twenty Designs) about 7 years ago

Scott, it is so hard to keep everyone on track. A seller that refuses to close swiftly after waiting and waiting and waiting is in danger of tanking the deal. But how can they get it all together? 

Suzanne, I think that is what we are coming to. Perhaps it is a new business opportunity, providing buyers and sellers with very short term rentals and pods... and magic to pack everything up in a heartbeat.

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 7 years ago

I have always said that the most difficult and the most neglected duty we have as REALTORS® is working together on possession. In Oklahoma we have table funding which means that once funds are in and all documents signed then you own the property immediately. Possession then becomes a question of coordination and hopefully courtesy. I rarely deal with USDA but I understand that plans are made in advance especially in our market which is storng.

Posted by Joe Pryor, REALTOR® - Oklahoma Investment Properties (The Virtual Real Estate Team) about 7 years ago

Andrea, It really does get interesting after a second appraisal is ordered and it doesn't come in and closing deadlines are right in front of us. I just finished sending in a rebuttal to the bank, hope it works.

Posted by Wanda Kubat-Nerdin - Wanda Can!, So Utah Residential, Referral & Relocation REALTOR (Red Rock Real Estate) about 7 years ago

I must be lucky because (knock on wood) I haven't been experiencing this at all. But it seems like many of you have been dealing with extensions. What are the reasons for the delays? Are the settlement timeframes too tight from the beginning, or are there unexpected hoops the buyers must jump through at the last minute?

Posted by Dana Hollish Hill, REALTOR and Productivity Coach (Hollish Hill Group, KW Capital Properties) about 7 years ago

Andrea...

We are running into the same problem here and it is maddening. Perhaps investors are holding out for higher rates and are deliberately delaying the underwriting?

Posted by Richard Weisser, Richard Weisser Retired Real Estate Professional (Richard Weisser Realty) about 7 years ago

It is vital to an agent to have a lending source as part of the team...Barring that, things may not run as smooth

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) about 7 years ago

Andrea. the lenders with their 'henchmen' underwriters are really causing serious issues and negatively affecting the lives of innocent buyers are sellers, alike!

Posted by Sandy Padula and Norm Padula, JD, GRI, Presence, Persistence & Perseverance (HomeSmart Realty West & Lend Smart Mortgage, Llc.) about 7 years ago

Wow... Im fortunate, I havent had alot of issues with morgs... in my market area, most of my customers are 50% down... and about half are still no/low docs and assuming all the money is traceable and seasoned...  so unless theres a title issue or some major violation, we are going to close in about 60 days..

Posted by Michael Ha Elmhurst, Woodside, Maspeth (Rego Park, Forest Hills, Jackson Heights, Corona, Middle Village) about 7 years ago

Andrea,

I think you have a lot of good advice in your blog. There is nothing more frustrating from a lending standpoint then to try and figure out schedules and delays.  I just moved from a very well known large lender to a smaller company.  One of the main reasons for the change?  Our company can close loans in two weeks!  I think when your income and reputation is on the line, it is best to align yourself with someone who will do what they say they can.  At the end of the day, your mortgage person should know there guidelines and products.  The end result will be a much better experience for everyone all the way around!

 

Posted by Jeff Winship NMLS #400982, Helping Finance Your Housing Dreams (Geneva Financial, LLC) about 7 years ago

Andrea, with government involvement you will only see more problems, since the government just serves itself. We have allowed this and once they are more of a force in mortgages, more problems will occur. We all say that there is nothing I can do about it. Control is what the government is all about.

Posted by Jimmy Faulkner, The Best Of St. Augustine (Florida. Homes Realty & Mortgage) about 7 years ago

In my experience, most Lenders aren't concerned about meeting dates/deadlines in purchase agreements.  However, some Mortgage Banks are specifically designed to accomodate the purchase process, and understand the importance of meeting those obligations.  To find those Lenders, look for Loan Officers that offer complimentary co-branded marketing for your purchase business.  That Mortgage Bank is very interested in meeting deadlines - they understand their Loan Officers reputation is at stake, which directly impacts the Lenders reputation, and business model.

For example, yesterday I read an employment advertisement from Broadview Mortgage, a Lender specializing in purchase business.  Here's a list from that advertisement, informing the Loan Officer of the tools available to them, to help build their purchase business:

• Annual Exhibition at the CAR / NAR Expo's
• Boards of Realtor Memberships
• Community Sports and Event Sponsorships
• Conference Attendance, Inman, REBarcamp
• Customized Loan Officer Web / Blog sites
• Customized Realtor Events
• Customized Realtor Partner Web / Blog sites
• Customized Sign Riders
• Down-payment Assistance Programs
• Homebuyer Workshops
• Networking Group Dues and Fees paid by branch
• On-time Closings, 27.51 Day Average (Purchase)
• Post Close Campaign, 5 Years -- e-mail and Print
• Realtor Continued Education Credit programs
• Realtor Lunch and Learn events

Posted by Raymond Denton, Veteran Friendly Realtor® (Homesmart / Evergreen Realty) about 7 years ago

Scheduling movers in our current market can be challenging at times.  No question about it, in recent years, there has been an abundance of the "do-si-do" in real estate sales.

Posted by Myrl Jeffcoat, Greater Sacramento Real Estate Agent (GreatWest Realty) about 7 years ago

Andrea yes we've been dealing with this for quite some time. I am happy to say it has gotten better this past year and we are now very clear as to what lenders to use and what lenders to pass over.  Fool me once - egg on you and fool me twice and that egg is on my face - and of course the conseguences for all parties involved. We also have a lot of cash sales which is always so easy and pleasant. Like Ginny I'd say well over half are cash this past few years - which is very different from years past. Hang in there...there is light at the end of the tunnel.

Posted by Anna Banana Kruchten CRS CRB, Phoenix Broker, 602-380-4886 (HomeSmart Real Estate BR030809000) about 7 years ago

Savvy sellers start moving out everything except the essentials early on during the transaction. Even using a storage facility for a couple of months is helpful rather than that last minute dash that is stressful and can also be costly.

Posted by Hella Mitschke Rothwell, Hawaii & California Real Estate Broker ((831) 626-4000) about 7 years ago

It's better if the sellers have already moved out, but that is not always possible. Buyers may have to be a little more patient and allow sellers time after closing to packup and move. 

Posted by Pamela Seley, Residential Real Estate Agent serving SW RivCo CA (West Coast Realty Division) about 7 years ago

Andrea I have the perfect solution for you.  Just have everyone sign and extension at the time they sign the contract.

Seriously, if the issue is not the Buyer, then it is the property or the Seller.  Some where along the line something is not going to line up due to new guidelines or requirement for more documentation.  Buyers and Sellers end up being frustrated, and Lender have increased costs because of the extra work. 

These days everyone involved in the process has to be on top of the loan from day one, no relaxing.  Even then it comes down to the wire many times.

It is all in the name of protecting the Buyer, or at least its what the CFPB tells us.  By the way I have a blog I will be writing about the increased costs because of all the additional protection Buyers are supposedly getting.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) about 7 years ago

I faced this issue with a wonderful couple this summer who were expecting a baby. The multiple extensions, coupled with the underwriters' request for a second appraisal 5 days before closing, having to move out of their rental on time but not being able to close on time ruined the sale for both the buyer and seller. They might have moved forward if the seller would have let them move into the house and pay rent for 5 days but the listing agent said it was her company policy not to allow her seller to do that. The sale never happened. The buyer's moved in with their parents so she could have some stress free time and prepare for her baby. The seller's were now stuck in the middle of summer (which usually means fewer buyers and showings) with a vacant house (they were having tons of showings before the house went into contract). The buyer's said they would contact me when they were ready to try it again, but I have not heard from them yet. They probably don't want to go through that again so soon and they now have to save enough money for another home inspection and appraisal (how come those guys get paid on the spot but realtors are just out of luck when sale doesn't close, oh yeah, we work for commission).

Posted by Kalene Bagwell, Realtor - Selling Blue Springs - Kansas City Metro (Realty Executives Of Kansas City) about 7 years ago

Andrea, The Gov't and their regulations are the problem. The pendulum always swings in the extreme directions. Once again they are strangling us with their craziness. It is as usual up to us to smooth the way and deal with the Buyer and Seller frustrations. 

Posted by Helen and Larry Prier- Re-Max Gateway - Residential Real Estate, Anacortes & surrounding Skagit & Island Counties (RE-MAX Gateway- Residential Real Estate Sales) about 7 years ago

Andrea, I have not personally experienced this, but I know agents who have been frustrated by what is happening.  It is a little insane, a little scary and very frustrating.

Posted by Gary Frimann, CRS, GRI, REALTOR and Broker (Eagle Ridge Realty / Signature Homes & Estates) about 7 years ago

Just one of the many obstacles we must face in our business--timing the moving of seller and buyer in a real estate transaction.

Posted by Harry F. D'Elia III, Investor , Mentor, GRI, Radio, CIPS, REOs, ABR (RentVest) about 7 years ago

Andrea,  a good topic, but one that I'm sure all interested parties don't want to talk about in the beginning of a transaction.  Again strong communications throughout the process should help alleviate any closing problems. 

Posted by Thomas Turner, Tom Turner (Caliber Home Loans, Inc. NMLS 15622) about 7 years ago

Fortunately I have been able to be free from these kinds of closings this year but did experience a couple last year where moving vans for both parties were in limbo awaiting the closing.

Posted by Marnie Matarese, Showing you the best of Sarasota! (DWELL REAL ESTATE) about 7 years ago

Joe, the best laid plans of mice and men.... You have an interesting way of doing real estate, but plans still have to be made...

Wanda, it is interesting at every turn these days. I hope your rebuttal works.

Dana, there are many reasons why, on the other post I referenced I listed some of them. Each deal has its own reasons. Some due to sellers demanding unreasonable time frames no matter what, some are just things out of our control. Lenders, buyers, agents, issues at the homes, appraisal issues, investors, underwriters. The blame can be spread around I am sure.

Richard, now that is something I haven't thought of. Oh how I hope not.

Richie, when you are the listing agent it is out of your control. And I had a flukey thing happen with a buyer that no one saw coming, no one.

Norman, I do want to put my big girl pants on and admit the blame can be almost everywhere... unfortunatley. It is just becoming too routine here.

Michael, lucky you! Count your blessings!

Jeff, I have one local lender that can close in 3 on a very good day. But with the first time home buyer that is not going to happen as many are using programs that require more time.

Jimmy, well.. I wish I could disagree, sometimes it seems the right hand could care less about the left hand.

Raymond, I have a very good list of a variety of lenders for all different circumstances. I am always hesitant to use a new lender. But it is not my decision at the end of the day.

Myrl, yes indeed, challenging at best, LOL.

Anna Banana, as I said, it can be on both sides for me, listing and buyers. I wish I could point to one problem that is causing it, but it is multi layered.

Hella, I agree... but boy so many are coming back on the market they are scared to do that.

Pam, yes, unless rate locks are now set to expire.. or who knows what other reason there is.

George, oh my, no, that will not fly but a great idea! And I understand there are a multitude of reasons this is happening. But it is happening more and more and more. Very frustrating.  I am waiting for your next post!

Kalene, that is horrible, just horrible. What more can I say... but horrible.

Hellen & Larry, some is, some are for other reasons, no matter what the reason it is a nightmare.

Gary, well put as it is all three of those. I am for the first time relieved that I was able to shrug my shoulders and look to the attorneys to decide what to do!

Harry, one of a multitude these days.

Thomas, believe me, I have seen where strong communication did nothing to alleviate the issue.

Marnie, that is so hard to deal with.

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 7 years ago

It is really about having a large communication flow between the parties so everyone knows when the move out date is looming.

Posted by Jay & Michelle Lieberman, Creating Calm in the Buying and Selling Chaos (Keller Williams World Class) about 7 years ago

Very hard with the way the banks are now. Always lots of extensions. Lots of property here sold furnished as they might be vacation rentals. Takes away some of the stress.

Posted by Bill Reddington, Destin Florida Real Estate (Re/max By The Sea) about 7 years ago

Jay & Michelle, we have had that but to no avail... still had such problems.

Bill, that would be easier, that's for sure. No moving companies to coordinate, etc.

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 7 years ago

Andrea,

Isn't uncertainly the second name of our business? Just wish the pendulum wouldn't swing so wide. I have joined a Yoga group just so I can learn to breathe during those instances.

Posted by Les & Sarah Oswald, Broker, Realtor and Investor (Realty One Group) about 7 years ago

Andrea - The instantaneous switch for the sellers to go from sitting on their hands to 100mph can easily cause whiplash and frayed nerves... and communication of what is happening is the best way to moderate the stress.  But buyers who haven't yet removed a contingency need to be understanding as well that there are two groups & two moves involved in most real estate transactions.

Posted by AJ Heidmann ~ CRS, YOUR Alexandria & Arlington, VA Real Estate Expert (McEnearney Associates, Inc.) about 7 years ago

We have found that finding a good lender to work with is key.  One that you can trust, makes your clients feel at ease, and doesn't make false promises.  Life has been a lot happier for our team since we found one!

Posted by The Matt & Molly Team, Moving The Mountains (The Matt & Molly Team) about 7 years ago

Andrea

No doubt things are becoming more and more complex, and as always tha banks seem to remain clueless, bound to their procedures, uncaring about any problems they are causing, and you are stuck. Contingency planning is a MUST - you have to anticipate the worst and prepare for it. Anyone who locks a plan in could be in big trouble.

Jeff

Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (eXp Realty of California, Inc.) about 7 years ago

Andrea, I tell Buyers that lenders see closing dates as moving targets. It is gut wrenching many times to get a loan to the closing table on time. George #41, certainly has insights that I don't have, but I think a huge problem is the lenders are understaffed and they can only get so many loans through a month.

Posted by Sharon Alters, Realtor - Homes for Sale Fleming Island FL (Coldwell Banker Vanguard Realty - 904-673-2308) about 7 years ago

George Souto has a great comment - be prepared is the only key.

"The mortgage contingency is finally met... and a clear to close comes.There is no time for planning."

And you are right - there is hardly any time between commitment (with clear to close) and actual closing!

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (LAER Realty Partners) about 7 years ago

Yes, I have also been extremely annoyed with the new way lenders are handling this, leaving no time for either side to fully prepare and plan.

Posted by MichelleCherie Carr Crowe Just Call...408-252-8900, Family Helping Families Buy & Sell Homes 40+ Years (Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty) about 7 years ago

Andrea - This is a good topic to discuss with buyers and sellers as it seems to continue to be an issue.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) about 7 years ago

Andrea,

I am trying to close a transaction that is 10 days over our closing date.  I wrote the contract with 55 days to complete.  Maybe, we are getting back to 90 days.

Posted by Pamela Smith, Sun City West, Corte Bella, Sun City Grand (Award Realty) about 7 years ago

Well, until this post I had never heard of mortgage extensions!  This is why I come to AR - to learn!

Posted by Jay Markanich, Home Inspector - servicing all Northern Virginia (Jay Markanich Real Estate Inspections, LLC) about 7 years ago

Hi Andrea-I yes me am going through this personally and am ready to start pulling my hair out!

Posted by Marco Giancola, Realtor (305)608-1922, Miami Beach Florida (Beachfront Realty) about 7 years ago

I've had people balk over a longer time for mortgage committment, but I'd rather have the approval come in earlier than than the date on the contract than continually go back for extensions.  Too much anxiety. And I do warn buyers and sellers beforehand.  There is just so much for them to absorb in a transaction-they are not always hearing you.

Posted by Barbara Tattersall, GRI (Keller Williams Realty Metropolitan (Keene,NH)) about 7 years ago

Show me the money means looking for other options beyond the guy or gal with the combination to the vault tumblers. Cash works. Ower financing and self directed mortgages custom made without the banker boy saying sign here, and here. And oh yeah, this form that says if we missed something you promise to come back in and cover my mistake.

Posted by Andrew Mooers | 207.532.6573, Northern Maine Real Estate-Aroostook County Broker (MOOERS REALTY) about 7 years ago

Sarah & Lester, that is probably the best way to prepare for all this!

AJ, the issue is often that sellers find it hard to believe the buyers are going to get a mortgage with all these requirements, so they don't prepare, or stop preparing to move until they have more proof. No matter what you say or do. How much you communicate.

Mat & Molly, there was someone good on both the latest deals. Didn't help.

Jeff, you are right. I always tell my seller a closing date is a moving target. The issue is they often think the buyer is not going to get the mortgage after all.

Sharon, you might be right about being understaffed.

Praful, not like it used to be... that's for sure.

Michelle, seems many of us are experiencing this new normal.

Christine, it's like discussing short sale issues. They don't believe what you say, or are not comprehending until suddenly it slaps them in the face.

Pamela, maybe we are... it might be safest.

Jay, learn something new every day!

Marco, it is so frustrating. I was so frustrated the only way I could vent was to share, LOL.

Barbara, no they are not always hearing what you are saying. I try to push dates out far enough... but sometimes it just doesn't work no matter what you do.

Andy, boy you said a mouthful!!!!

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 7 years ago

I have friends who just told me about having to pack up and move from a four bedroom house to a two bedroom condo in 8 days after their purchaser had trouble with his mortgage.  Seems like there ought to be some flexibility for the seller to extend the settlement time rather than expect them to be all ready to go without knowing if its going through.

Posted by Elizabeth Bouchard, Associate Broker in Northern Virginia (Long & Foster Realtors) about 7 years ago

Elizabeth.. how about expecting a move in 3 days? After much feet dragging, after the seller was asked to extend the mortgage commitment for almost a month? And there was much teeth gnashing that it couldn't be done. The seller thought their next move was going to be to put it back on the market. They really believed it wouldn't happen.

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Berkshire Hathaway HomeServices New England Properties) about 7 years ago

The sell-to-buy scenario raises the stress level for everyone. Especially when the buy-side has a sale of home contingency and a financing contingency. It puts the buyer in a less than ideal situation and buying position. Sellers are reluctant.

I'm working through this right now. I suggested the buyer take a time-out, get his property closed (soon) and go shopping ready to buy. Of course this comes with the attendant personal property storage issues, temporary living arrangements...etc, etc.

Posted by Bob Pisa, Broker Associate, Commitment, Service, Satisfaction... (Downing-Frye Realty, Inc. Naples, FL) about 7 years ago

I am currently in the exact position with a Seller that is considering no additional extensions and putting the home back on the market - stressful and frustrating for all parties involved!

Posted by Rebecca "Becky" Joens, Broker- Associate, SFR, RE Instructor (Heart of Florida Realty, LLC) about 7 years ago

Dear Andrea, 
A wonderful post as usual. Matt and Molly - #54 have the solution we prefer - we offer Clients three mortgage lenders' names WHO DELIVER THE CLOSING ON TIME. Their names are part of our comprehensive service offers. They are a great benefit to our team as Richie #30 mentions.

We cannot require that Clients use our suggested Lenders, of course. If the Client wants to choose a different Lender, we make it clear that they will have to keep on top of the procedure. Their choice - their responsibility. Yes, we still follow-up - of course!

George Souto # 41 - with his usual wisdom - offers extra comments to discuss with Clients. Everyone must pay attention to all details on the road to Closing. Be prepared and - if not get extensions signed up front - at least explain the overall situation to Clients. 

Have a happy day - Lynn

Posted by Lynn B. Friedman, Concierge Service for Our Atlanta Sellers & Buyers (Atlanta Homes ODAT Realty Call/Text 404-939-2727 Buckhead - Midtown - Westside -- and more ...) about 7 years ago

Man, the USDA length of time has become an issue. I almost had one Seller/Builder cancel the sale due to their slowness. He had other Buyers and needed to move the property. This was when they first went from a few days to 3+ weeks. Better now that we know what to tell all parties.

Posted by Travis "the SOLD man" Parker; Broker/Owner, email: Travis@theSOLDman.me / cell: 334-494-7846 (Travis Realty) about 7 years ago

I am sure you are speaking of short sales but it happens with standard sales as well. Planning to move...don't wait!

Posted by Gary L. Waters Broker Associate, Bucci Realty, Fifteen Years Experience in Brevard County (Bucci Realty, Inc.) about 7 years ago

I agree that finding a local lender who doesn't make false promises and whom you can look in the eye makes life easier.  Yesterday, though, I had a great experience with one of the big nationals that I had always thought regarded the close date on the contract as a suggestion rather than a contractual obligation. I represented buyers who wanted a 21 day closing. The big national agreed they could accommodate it, and they had the documents and approved HUD to the title company 5 days BEFORE closing. The buyer's closing started at 9:05 and it was closed and funded by 9:35.  To say I was amazed was an understatement. 

In one of the areas where I occassionally sell, the sellers almost always ask for a 2-5 day temporary lease back so they can better plan their move.

Posted by Debra Hight, Debra Hight (Coldwell Banker United, Realtors) about 7 years ago

I think this requires an honest introspective.  Granted, you need a good mortgage professional to work with. However, in my many years in this business, I have seen an excessive number of purchase contracts that:

1. arrived at my desk after sitting too long elsewhere, leaving an inadequate amount of time to get the job done.

2. I have seen many contracts that are signed and dated to close within 30 days of the mortgage broker receiving them.  While this is NOT an unobtainable goal, there are often factors that can push closing dates way beyond these tolerances, such as USDA underwriting turn-times, weather, appraisal issues, etc.

3. Contracts that arrive incomplete, not signed, dated, etc. I have personally been told when pointing such items out "not to worry about it"! Sorry, it's my JOB to worry about such things!

4. Here is a reasonable cure.  As we know, it always makes sense to have your client pre-qualified for their mortgage.  Take it one step further. Have your client not only pre-qualified BEFORE they sign a contract but ask your mortgage person for THEIR input on how long it will take to satisfy the terms of mortgage approval, and date the contract for closing based on that recommendation.

While this is NOT an end-all-cure-all, I think you will find your need for contract extensions will decrease.

Posted by Randall Smith, Inside Wholesale/Correspondent Mortgage Lender (Amerisave Mortgage Corp TPO) about 7 years ago

Andrea:...Just another hurdle to get over in getting a deal to happen. I don't know about you but in this very busy market, it is almost impossible to get a deal to closing--the cash deals are just as difficult as the financed ones here. Extensions are the norm here--any reason will do!

Posted by Paula Hathaway, REALTOR, LBA, ...A Local Expert in all The Hamptons (Douglas Elliman Real Estate) about 7 years ago

#74's answer is just ridiculous. As it turns out in most cases like mine, the buyers are preapproved & the timing just keeps getting extended over & over again. I've complained about this before it is the processing part, not the buyers in most cases. Too much double & triple checking of everything.

Posted by Lyn Sims, Schaumburg Real Estate (RE/MAX Suburban) about 7 years ago

Always good to keep abreast of trends outside your market area.

Posted by John DL Arendsen, Crest Backyard Homes "ADU" dealer & Contractor (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) about 7 years ago

Andrea,  Your absolutely right about this and its unfortunate that all banks don't do more to accommodate purchase transactions.  WE ARE THE EXCEPTION!  We have a "Buyer Ready" program that allows eligible buyers to get a full APPROVAL before the buyer finds a property.  This reduces process time significantly and allows for a quick close once the purchase contract is signed.  Of course, USDA is usually an exception as far as expedited closings go but that seems to be a given these days, especially now with the new eligible areas to take effect on Oct 1st. We bend over backwards for our customers as well as our Realtor partners to ensure a seamless purchase transaction and only get rave reviews.  Hopefully, it will catch on and other Banks will start doing this but for now, it seems like we are one of few that offer this which is really a shame.     

Posted by Brennan Hubbert, Mortgage Banker (Peoples Home Loans) about 7 years ago

We all must navigate stormy seas together! Experienced Agents make for smooth sailing on a BUMP Y wAvEs!!! ;)

Posted by David Evans, HUD NLB Cumming GA (RE/MAX TOWN AND COUNTRY) about 7 years ago

I am in the midst of my most important closing...my daughter's first home and it has been a nightmare. The lender even asked for an addendum to be signed! designating who the listing and selling agents are. It's been one additional document request after another. In Florida, our Keller Williams Preferred Vendor, Citibank, is offering a $1500 check to Buyers who's loan does not close on time. I wish I had used them as that is a great incentive!

Posted by Susan McDavit (Keller Williams Realty) about 7 years ago

I had never heard of mortgage extensions either, wow, learn something new every day. 

Posted by Suzanne Taylor, Home Sales In Corpus Christi, TX (Ultima Real Estate - Corpus Christi) about 7 years ago

real trauma in this issue for some sellers as well... we have a client who is awaiting mortgage approaval for the sale of their house, in order to buy anotehr house, and the bank for the buyer of the first one is pushing the dates out further and further...

 

We even had one bank in a foreclosure sale that closed on time, insist on a signed extension despite the fact that the sale had already closed... and it closed within the tiem frame originally stated... why insist on an extension AFTER the closing went through on time?

Posted by Paul Silver, Rhode Island full service real estate firm about 7 years ago

If an agent secures all the information from the check list that your MLO gives you, secures the name of the processor that is validating the information from the loan documents and the name of the underwriter who is assigned to determine the status of the loan and follows up with the process with your MLO, who would have provided an estimated completion date prior to submission of all documents, shouldn't these circumstances be avoided?

Posted by Kimo Jarrett, Pro Lifestyle Solutions (WikiWiki Realty) about 7 years ago

Good post.  It's a jungle out there!  Here in Texas, as a listing agent, I always negotiate a Seller Temporary Residential Leaseback to avoid just this problem for my sellers.  Although the anxiety level is always high with a difficult mortgage, and closing may be delayed with extensions, my sellers always close, get funded and then move out. On the buyer side, you just have to be flexible, think out of the box and over-communicate with everyone. And, whether you're representing the seller or buyer, always manage client, customer, and co-op agent expectations closely.  You'll be glad you did.

Posted by Ken Hunter (Better Homes and Garden Real Estate-Gary Greene) about 7 years ago

Planning and being prepared is the key.  I have not seen near the need for contract extensions this year as I have in past years.  In part, this is because I am seeing more realistic closing dates on the inital sales contract.

I do agree with Randall in #74.  A lot is the issues that we face lie outside of the lender.

I still sometimes receive contracts days and days after they are originally executed.  Of course, with some Buyers, I have never even spoken to them yet to being the Pre-Qualifcation process.  With others, some have waited until after their inspection to tell me they were under contract. 

We still do get the occassional one written for less than a reasonable time to close.  A regular loan closing in under 30 days is setting eveyone up for failure from the very beginning.  I even see Renvation loan contracts written for 30 days. 

I have seen 7 day appraisal contingencies on contracts.  With current appraisal regulations, we may not even have it back in 7 days, let alone reviewed by an Underwriter.

I received a "fully executed" sales contract yesterday.  It was missing 4 of the 5 Exhibits.  There is not much I can do without all of the Exhibits.  A page without someone signing it is also very common for me to see.

Attention to detail is critical for all parties.  This includes Buyers and Real Estate Agents alike.  The mortgage lender is the final assembly point.  We cannot adequately do our job with missing or broken parts. 

 

Posted by Rodney Mason, VP of Mortgage Lending - AL, FL, GA, SC, & TN (Guaranteed Rate NMLS# 2611) about 7 years ago

Luckily, around here, we aren't experiencing this sort of lunacy. We try to adhere very closely to our P&S timetables because the lenders don't want it any other way!  It's when the buyer or seller changes something that the lenders get all bent out of shape.

Posted by Brad MacKenzie, Turning Houses into Homes on the South Shore (Brad MacKenzie) about 7 years ago

Lenders' loan processing is becoming more and more obnoxious. I am surprised whenever a close does happen on time.

Posted by Sylvia Jonathan, Broker Associate, SFR (Coldwell Banker Platinum Properties) about 7 years ago

I've never had a USDA loan so I can't attest to that. However, my conventional loans have gotten delayed for bogus stuff that the underwriter is just making up. One loan was extended so long, the lender and builder ate the relock fee!

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com) about 7 years ago

I don't run into this too often here in San Francisco.  Yet, I always manage expectations by letting everyone know that there might be unforeseen delays and if they appear do not be surprised.  It makes it easier when people understand that going.  When it happens I hear, "Oh Frank, yeah you said something like this could happen."

Posted by Frank Castaldini, Realtor - Homes for Sale in San Francisco (Compass) about 7 years ago

Delay is definitely the word these days when it comes to getting a mortgage. Sadly it often causes a domino effect for more delays causing more added stress.

Posted by Mitch Muller - Charlotte NC Real Estate, Certified Residential Specialist (ProStead Realty Charlotte, NC CRS SRES mitch@prostead.com) about 7 years ago

I saw a post on the Facebook Group yesterday, Raise the Bar in Real Estate, about this very issue.  Lenders are so afraid to lend that I think they tend to forget or not care that people's lives are affected by their actions.  I have had two deals this summer that went right up to a few days before closing fall apart.  Why, because someone in the lending pipeline dropped the ball and didn't do their job.  At the last minute when the buyers had already given notice to their landlord and the sellers were packed to move, even utility changes had been arranged, the deal goes sideways.  This is so totally unfair to the people involved. 

I am beginning to think we need to write our contracts so that the sellers have a week after closing to move before the buyers move in.  Insist that they get renter's insurance for those few days to cover their personal belongings and allow both parties to breathe a sigh of relief that it is finally done.  Pre & Post possession agreements are bad business, but at least sellers don't move out thinking their house is sold and buyers don't get their movers lined up the day of closing only to have everything come unraveled at the last minute. 

If this is the new normal, I don't like it one bit.   

Posted by Sandra Paulow, REALTOR, Associate Broker, GRI, SFR (Aspen Properties, Inc. ) about 7 years ago

Yes, I've had a few delayed closings with everyone getting very nervous.  I hope it doesn't continue.  However, most have gone smoothly ..... so far.  

Thank you for your informative blog.

Posted by Christi Farrington, ~ Your representative in Fairfield County, CT (Dagny's Real Estate) about 7 years ago

Source of funds, underwriter, and lender under the same roof has often been more efficient.

Posted by Dwight Puntigan, Dwight Puntigan (DRP Realty, LLC) about 7 years ago

Hi Andrea, as you say it is the new norm.  We have buyers/sellers waiting until the last hour for some of these lenders!

Posted by Bob Miller, The Ocala Dream Team (Keller Williams Cornerstone Realty) about 7 years ago

Sounds like a frustration.  I don't see that happening around the Bay Area.

Posted by Tina Lam, Residential REALTOR, Broker - (408) 320-5261 (Archers Homes) about 7 years ago

I agree that George's "no relaxing" policy is the right one. However, there is one major thing that will help mitigate this that is being discussed in the banking trade press: a drop off in refinance business. There is a monthly survey done by Ellie Mae which says the average number of days to close in July was 44. This problem should be somewhat alleviated.

Posted by Dana Voelzke, Loan Officer/ First time home buyer specialist (loanDepot (203) 733-9408) about 7 years ago

I just had a buyer that had to stay in a hotel for a month. his current landlord would only accept a new full year lease and would not let him stay until new place closed. To make things even worse the lender never locked in the really low rate the buyer was promised.

Posted by Mitchell J Hall, Lic Associate RE Broker - Manhattan & Brooklyn (Compass) about 7 years ago

Excellent Post.  It does seem that the need for extensions is getting somewhat better in this area (Phoenix) lately, as approval times seem to be shortening. 

Much of what is mentioned here is absolutely correct. 

And, yes, the larger lenders seem to operate within their own time framework. Our Purchase Contract in Arizona specifies that the buyer will provide regular updates on the status of their loan, using a "Loan Status Update" form.  There are some larger institutions that will not fill out the form, or even advise status in writing.

I now strongly encourage buyers to use a LOCAL loan officer.

I really find that the loan officers (whether working for a large or small institution) & mortgage brokers who have a genuine local presence in the community seem to do a much better job of moving the loan process through, and in keeping both the buyer and seller agents informed. 

Posted by Lynn FISCHER Phoenix, AZ West Valley, Sun City, Active Adult, Sun City Grand (HomeSmart) about 7 years ago

The biggest problems and the most delays are with government sponsored loans. No surprise there!

They're indifferent - and they don't CARE if things are done on time. 

Posted by Marte Cliff, Your real estate writer (Marte Cliff Copywriting) about 7 years ago

Hi Andrea,

Great post and very true here in California as well! My husband runs the mortgage side of our business and I can't tell you how many times he has had to explain to an agent (that hasn't closed a deal in several years) that times have changed and a 30 day escrow is almost a pipe dream nowadays ; )

Have a great weekend ahead,

Gina

Posted by Momentum Realty, Orange County CA Real Estate Agent (North Orange County CA Real Estate Specialists) about 7 years ago

All CASH Buyers are the best! 20% down are second best... THEN...It's all speculative from that point on to FHA with 3% or even Less than 0% down...

Posted by Tom Waite, So Cal-Apartment Bldg Investments (Thomas Waite Real Estate Broker) about 7 years ago

Sad to say but the underwriters could not care less if everybody has their stuff in a moving truck sitting in the driveway and the closing gets delayed.

Posted by Alan Grizzle, Full Time Realtor, Lifelong Resident of Dahlonega (Chestatee Real Estate) about 7 years ago

Andrea, I'm seeing this on all my sales requiring mortgage.  It seems like every lender is overloaded with work.  The movers must be going crazy because everyone is rescheduling.  I warn my clients that this is happening so I haven't had clients angry at me personally, but it's frustrating for all involved.  It used to be one extension was the max, now it's extension after extension.

Posted by Gail Robinson, CRS, GRI, e-PRO Fairfield County, CT (William Raveis Real Estate) about 7 years ago

It is everyone's nightmare when the closing get delayed or cancelled at the last minute. That's why I always advise my clients (both sellers and buyers) to give themselves a few days and not plan to move in or out right at closing. Sometimes, it is easiest said than done... Aloha!

Posted by Monique Ting, Your agent under the sun (INET Realty Honolulu, HI) about 7 years ago

This is not the new normal - this is a result of a lack of communication between all parties - the realtor is delayed waiting on signatures, etc...the title company/escrow company is delayed waiting for the necessary information to process, etc...the lender is delayed waiting on the buyer to provide supporting documentation confirming assets, etc...everyone is waiting on everyone else...we all have to be involved as a team and work together in absolutes - Instead of working under assumptions that every hand involved is ready to go and has what they need.  We're only human - things slip thru the cracks sometimes and we've got to work together to keep that from happening.  I send out a "closing report" to agents & lenders weekly on their transactions to show them what I am doing and what I am aware of - and then we discuss further.  I also update the buyer/seller weekly as well.  This seems to be working so far - started doing this a couple of months ago to help keep the ball rolling smoothly - we're kind of turning into a power team here in Central Arkansas!

Posted by Jennifer Nickerson, The Real Estate Mama (Edge Realty ) about 7 years ago

Thank you for a timely article. Delays should be expected for any purchase under $200xxx seems to be the rule of the day. There are no quick and easy deals to be had when the rules of lending seem to change daily.

Posted by Anna Hatridge, Missouri Realtor with R Gilliam Real Estate LLC (R Gilliam Real Estate LLC) about 7 years ago

I also think some lenders have the attitude, "as long as it closes" everything is ok.  However, the selling of a house take so many people and so much has to be coordinated.  When things get delayed it affects so many people.

Posted by Brien Berard, Maryland Real Estate Agents - Laurel Real Estate (Remax Professionals Laurel MD) about 7 years ago

Dodd Frank has go along way toward ruining the real estate market and mayb they will suuceed in the next two years

Posted by Charles Stallions, 800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl. (Charles Stallions Real Estate Services ) about 7 years ago

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