How can sales be occurring at their normal seasonal levels, but pending (homes under contract) are way up?
My Theory:
Because escrow periods have gotten much longer (dealing with the bank, on both sides likely takes longer....buyers are finding it harder to get financing and the banks selling the homes take forever to make decisions).
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5 comments:
Yes
There are many reasons...
(1) Not every single pending sale will result in a closed sale because (a) the buyer may find something wrong with the house within their contingency period and not purchase it, (b) repairs delay the close of escrow, (c) the house may not appraise and a new purchase price can not be agreed to by both buyer and seller, (d) the buyer's lending program changes and delays closing or makes closing impossible, etc.
(2) You are correct that bank owned property transactions can be problematic due to (a) often times the banks not delivering in writing a fully executed purchase agreement in a timely manner, (b) the house may be vandalized and need last minute repairs before escrow can close, (c) title issues may exist, and even though the buyer completed their timeslines correctly, the new deed of trust can not be recorded at the county once the loan funds, (d) the listing agent for the bank owned property does not update MLS that the sale closed until several weeks after, etc.
(3) Closed sales will always lag behind pending sales because (a) it is typical for escrows to be anywhere from 30, 45, or 60 days from acceptance, (b) pending short sales can take months to close escrow, (c) the purchase might be contingent on the sellers conncurrent close on a replacement property, (d) the purchase might be contingent on the buyer's conncurrent sale of their property...the list could go on and on...and detailed explanations of each could go on and on. This stuff happens in even the hottest markets...hope this sheds some light. ;-)
Erin
That's my observation as well. I've been seeing homes go pending, come back, go pending, and come back yet again.
From what I've heard, it has a lot to do with the appraisals coming in too low. The homes have to be priced wayyyyyy below market before underwriting will take on the risk. This is on top of most buyers asking for the full 6% from the seller in closing costs and rate buydowns.
If REOs, which tend to be at the bottom of the price spectrum are having issues, imagine what traditional resales are running into - ouch.
We're close to making a serious offer on a REO. Our starting point is 27% below asking, just to give you an idea of where things stand. This doesn't mean were going to come up half way, that is best and final.
Check out the trend line on Erin's blog
http://sacramentorealestateblog.blogspot.com/
DJ - you are gonna be one frustrated person!
Funny, I was going to say the same thing to you Sippin. I feel compelled to buy at a reasonable price. If I can't get a reasonable price then I'm free to bask in the warm glow of increased rental availablity and lower prices >; )
I get the list of the trustee sales, I know what's coming.
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