Friday, July 8, 2016

60 Day Close, The New Norm?

As I mentioned in last week's post, appraisals are taking more than a month to complete and now with an uptick in closings banks are getting backed up in underwriting as well. Buyers utilizing a government backed loan product ought to be prepared for a 60 day closing cycle. Even conventional loans could find themselves tickling the two month mark.

One of the issues is that sellers and their agents need to recognize that two offers identical other than one with a 30 day closing and the other with a 60 day could effectively be the same offer. Taking the 30 day close deal very likely will result in a 60 day closing anyway as the Realtor on the other side will almost certainly be asking for an extension when the deadline arrives and the appraiser hasn't been out to the property yet. The longer closing cycle could show the seller that the agent is realistic about timelines and it should always be noted that asking for 60 days does not mean it can't close before. Unless the buyer specifically needs that much time an offer can come in as on or before such and such a date.

Realtors need to also submit their offers to the seller with a solid explanation of the buyers position. The buyer doesn't want to lose a opportunity in this tight might over confusion about their ability to close as quickly as anyone else. These kinds of exaggerated seller's markets lead many buyer's agents to try tactics to make the offer look better. There is nothing inherently wrong with that, but putting a thirty day close on a VA or FHA offer in this market under the current conditions is not exactly forthright either.

Until the issue with appraisals is settled, and I believe it will be adjusted in the next several months, 60 days could be the new "normal". Sellers simply need to be aware of these conditions in the marketplace.

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