The Turtle or the Hare?

So much has changed in real estate the past couple of years that it is difficult for buyers and sellers to feel comfortable while pacing through a transaction anymore. Often times we hear some form of these questions:

• "Why is my transaction taking so much longer than my brother/cousin/grandma's did last month?"

Or,

• "When we bought our last home, it only took 30 days to close. Isn't that the norm?"

The answer is simple, yet complicated too. The truth, the simple truth that is, is that your sale may take longer because all deals are different and have their own quirks. However, that is not the whole answer. We all know there have always been hiccups to deal with but what is going on now is different in a lot of ways.

Here are 3 reasons that a transaction may move at a snails pace:

1. Short Sales, Bank Owned and Traditional Sales all move at different speeds. When buying from a regular seller, things generally move more quickly than if you are dealing with a bank owned home because they can respond to questions and paperwork more quickly than a large institution. On a short sale, you are dealing with a real seller like a traditional sale, but they are not completely in control. They need an approval from their mortgage lenders to sell for less than the balance of the home, which can take a maddening amount of effort and time. Some short sales take as long as 4-7 months to complete.

2. New government regulations and policies have slowed the loan approval process down considerably. The loan often times has to be underwritten prior to ordering the appraisal, which delays things. The lender has to order the appraisal, taking that control out of the mortgage brokers hands. This has a special delay on the transaction because the appraisal is chosen at random. If the appraiser you randomly draw is slow, deal with it. If the appraiser you draw is particularly bad at his/her job and revisions are necessary, deal with. And worst of all, if your loan is not acceptable to a particular lender and you need to apply elsewhere, the appraisal is not likely transferable - MAJOR DELAY, plus you have to pay for another report. If you want to get to the appraisal stage, a buyer first has to get through underwriting. A lot of files are held up by the new disclosure laws that are intended to better inform a borrower about the fees incurred by financing a home. Unfortunately the forms are more complicated and are interpreted different by each lender. Therefore, it may take an extra 24, 48 or 72 hours to have the application registered by the bank.

3. Lending guidelines continue to change. Simply put, if guidelines are not constant, certain avoidable problems with a loan file may catch a loan officer or borrower off guard. Some of this is unavoidable, but even more so when your mortgage agent does not know the latest lending restrictions.

Although there is an increased number of obstacles and delays, we have still been doing quite well in making these transactions happen. There are still great deals out there and there are still buyers and sellers willing to go through the hassle of it all.