The 7 Most Common Reasons Real Estate Transactions Fail You’ve got the contract signed, the closing is approaching quickly, and the last thing you want to happen is for […]
RICHMOND, Va. – April 20, 2018 – Nobody likes getting tax bills, especially homeowners who are burdened with ever-escalating local property taxes. Last year, property taxes collected by local and […]
The 7 Most Common Reasons Real Estate Transactions Fail
You’ve got the contract signed, the closing is approaching quickly, and the last thing you want to happen is for the real estate transaction to fall apart just before the closing date. Why do so many deals fall apart at the last minute? How can these fails be prevented?
Getting a real estate contract signed is just the first step in the transaction process. It’s when the real fun and work begins. This is where the best shine and gain an edge in their market, while the rest slink back off to oblivion.
Failed closings are tragic for a buyer, seller, and real estate agent or broker. They can be expensive, stressful and demoralizing as a buyer or seller. As a Realtor, they cannot only rob you of your paycheck you were so eagerly counting on but dent your reputation and make future business harder.
Depending on the market temperature and mortgage lending landscape anywhere from 3% to 30% of pending sales contracts can fall through. That number can be dramatically lowered, and completion metrics increased if all the parties involved are more knowledgeable about the frequent glitches and how to get out ahead of them.
Here are seven common reasons you deal could fall apart, and how to beat it.
This one should be no surprise. Appraisals are the notorious Achilles heel of real estate transactions. If it comes in too high, the seller can try to back out and relist for more money. More often, the appraisal comes in low. That can scare off buyers and wreak havoc with mortgage loan applications. As a Realtor, you’ve got to know your values and comps the way appraisers and lenders look at them. Know how to successful rebut bad appraisals. Have a plan for renegotiating or restructuring the deal with your clients in advance. Agents should probably consider taking the appraiser licensing course for their continuing education credits and master this part of the business.
For as easy technology has made the rest of our lives, mortgage lending is still incredibly inefficient. From gaps between pre-qualification letters and underwriting to continually changing influences behind the scenes, disconnected underwriters and meticulous paperwork burdens. Many issues can come up. Often they show up right at the last minute, the day before closing. Typically in final reviews and appraisal reviews. Agents can help their clients ace this by knowing loan program qualifications and quirks. Be sure buyers are working with a loan officer who will help them preempt any last-minute conditions that will stall the transaction.
Buyer’s remorse can be an issue. It’s easy to get a buyer to fall in love with a property and e-sign the purchase contract. The longer the closing takes, the more time they have to have second thoughts. If things start to go wrong, like significant repairs being uncovered, the market changes or their loan interest rate goes up. They can begin to drag their feet and sabotage the deal themselves. More commonly buyers accidentally undermine their home purchases by going shopping for furniture and racking up credit card and store debt during the loan process or quitting a job. Lenders will often do final re-verification right before closing and catch these items. Educate your clients, take time to explain these things and make sure they are sold on the deal upfront to avoid these problems.
Sellers can forget, be unaware of, or get hit with liens and new debts on their property during the process. This can deplete their anticipated sales proceeds or mean they have to bring money to the closing table to sell. That can cause many sellers to back out. These items can include past due property taxes, mechanics liens, HOA, and condo association special assessments, additional loans or lines of credit attached to the property and code violations. These surprises can be avoided by using an experienced Florida title insurance company who gets on the job to perform title and lien searches early and knows how to proactively tackle potential issues and keep the deal alive.
While the market has bounced back in a big way since 2008, the foreclosure crisis has also really messed up the titles and chain of titles on many properties. Between lender robo-signing fraud, overly creative attempts to stop foreclosure, auctions, and house flips, many properties are being advertised out there that buyers may not be able to get title insurance on. At least not to the level a new mortgage lender is going to expect. Pulling title early, or as a listing agent even ordering preliminary title searches and home inspections can save much stress, lost time and deal fails.
Some associations can be a real drag on real estate deals. Lengthy and inefficient buyer approval times, stringent qualifications and even personal prejudices can burn precious time or crush contracts. It’s smart to know your associations before showing buyers property and to work with other professionals who have relationships with them and know how to get approvals expedited.
Many of the above items can cause delays. As can sellers and buyers realizing their ID is out of date or being slow to send funds for closing. Some sellers and listing agents are gracious about granting contract extensions. Others get greedy and see a chance to grab the buyer’s earnest money deposit. Give your contracts extra time so that issues can be worked out and educate clients on the reality of trying to sue over deposit funds.
Have more questions about making sure your next real estate transaction sails smoothly to a successful closing? You can make the process seamless and hassle-free by contacting Title Partners of Florida.
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RICHMOND, Va. – April 20, 2018 – Nobody likes getting tax bills, especially homeowners who are burdened with ever-escalating local property taxes. Last year, property taxes collected by local and state governments rose by an average 6 percent – $293.4 billion in total – almost three times the annual rate of inflation. But the tax rates you pay are probably very different from what owners pay elsewhere. In Essex County, N.J., the average property tax on a single-family home last year was just under $12,000, according to a new study by ATTOM Data Solutions, a firm that tracks information on 155 million U.S. properties. In West Virginia, by contrast, the average was just $807. Sure, average home values in New Jersey and West Virginia differ dramatically, as do the effective tax rates imposed by local governments to pay for the services they provide. But here’s a question: Is there a link between property tax rates and the rate at which your home appreciates in value? Are areas with high housing costs and tax rates less likely to see high appreciation rates? Do markets with more affordable prices and low tax rates do better on appreciation? It’s a complex subject. But ATTOM Data’s voluminous property tax files, plus its trove of current and historical home value and price information, open the door to take at least a peek. For this column, I asked ATTOM to conduct a new statistical analysis, comparing recent appreciation rates and home-value data with effective local property rates around the U.S. The findings are intriguing: Homes in areas with the highest effective property tax rates – that is, the average tax rate expressed as a percentage of estimated home values – appear to have appreciated more slowly during the past year and the past five years on average than homes in markets with lower tax rates. Homes in those areas increased in value by an average of 28 percent during the past five years and 3 percent in 2017. Homes in the middle third of markets, where effective tax rates are more modest, experienced higher rates of home-value appreciation – 35 percent on average over five years, 7 percent during the past year. Homes in the bottom third in terms of effective tax rates saw values increase faster – an average 42 percent over five years, 5 percent in the past year. Daren Blomquist, senior vice president of ATTOM, cautions that there are exceptions to the overall trend here, “notably markets in Texas with high property-tax rates but also very strong home-price appreciation over the past year and five years.” Illinois has high tax rates (2.2 percent) yet saw average values statewide increase by 10 percent last year. As a general rule, the highest effective tax rates in the nation are in the Northeast and the Midwest, with a smattering in Florida and Oregon. New Jersey had the highest overall rate (2.28 percent and an average five-year price appreciation rate of just 6 percent). Connecticut’s 1.99 percent effective tax rate ranked it seventh-highest nationwide. But the state experienced a one-year average price gain of just 1 percent and a five-year average of just 5 percent. Maryland and Virginia average home prices are relatively high, but their effective tax rates are surprisingly moderate compared with the nation overall. Maryland posted an average rate of 1.03 percent and experienced a five-year, 15 percent average home-price gain. Virginia’s average tax rate was 1.05 percent; its five-year average gain 20 percent. The District of Columbia is a mixed bag – a below-average 0.65 percent effective rate on an average home value of $789,391, a 1 percent average value gain last year and a 26 percent appreciation rate over the past five years. California had a below-average effective property tax rate of 0.76 percent in 2017 and a one-year average gain in value of 8 percent. What to make of these results? The study’s three general conclusions above are noteworthy, but keep in mind that the study’s scope and methodology were limited. Taxes alone do not determine demand – or home-appreciation rates. Multiple combined factors can also be important: local economic conditions, employment and school quality, among others. But on average, low to modest tax rates appear to be connected to higher recent appreciation. If you’re on a fixed income and looking at potential retirement areas, or you’re a first-time buyer and affordability is key, tax rates may be an essential consideration. © Copyright 2018, Richmond Times-Dispatch, Richmond, VA, Kenneth R. Harney. Harney heads his own consulting firm in Chevy Chase, Md. |
The 7 Most Common Reasons Real Estate Transactions Fail
UncategorizedThe 7 Most Common Reasons Real Estate Transactions Fail You’ve got the contract signed, the closing is approaching quickly, and the last thing you want to happen is for […]
Do lower property tax rates = higher home appreciation?
UncategorizedRICHMOND, Va. – April 20, 2018 – Nobody likes getting tax bills, especially homeowners who are burdened with ever-escalating local property taxes. Last year, property taxes collected by local and […]