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).”
An increasing share of contracts are settled on time, based on the March 2017 REALTORS® Confidence Index Survey Report. Among respondents who reported they had a contract that went into settlement or was terminated over the period December 2016–March 2017, 70 percent reported that the contracts were settled on time, 23 percent had a delayed settlement, and seven percent reported that the contract was terminated. During the same period in 2015 and 2016, only 65 percent of contracts were settled on time.
Among contracts that had a delayed settlement (23 percent), 30 percent faced issues related to obtaining financing and 21 percent had appraisal issues. While they are still the top cause of delay, issues related to obtaining financing have been cited by fewer respondents than when NAR first tracked this indicator. Forty percent of those reporting a delay cited a financing issue. The decline may reflect the improvement in the economic environment, better credit histories from borrowers, and improvement in the loan evaluation processes of mortgage originators.
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. 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.
Among contracts that were terminated (seven percent), 25 percent faced issues related to home inspections and 20 percent had issues related to the buyer’s ability to obtain financing.
Source: Economic Research