When I talk to real estate closers, lenders and other agents lately, it seems like how hard it is to get from purchase agreement to closing nearly always becomes part of the conversation. In fact, closers often don't schedule closings very far in advance because so many are delayed, rescheduled or cancelled altogether.
The National Association of Realtors reported that the average cancellation rate of purchase agreements in the last 16 months has been 8-10% so it goes beyond simple perception.
Cancellations have become a frustrating problem… why are so many deals falling apart? Here are some contributing factors…
- Buyers are pickier
- Home inspections nearly always turn up some problems in homes, but minor problems that buyers once let pass are now derailing deals
- Buyers more often have increased demands for replacements, repairs and price reductions… which sellers may be unwilling or unable to accommodate
- Buyers are more often holding out for perfection and are more ready to simply cancel the purchase agreement if it doesn't measure up to their expectations after the inspection
- Short sale cancellations
- Buyers may get tired of waiting for short sale approval from the seller's bank and move on to another property
- Seller's mortgage company is more often refusing to approve the short sale
- It has become more common for the seller's private mortgage insurance company to demand more money, even asking buyers to contribute
- Lowball appraisals by the buyer's mortgage company can derail a purchase
- Buyers aren't the only ones who are pickier, so are underwriters… increased demands and restrictions by the buyer's mortgage underwriting sometimes cause unexpected problems, resulting in delays or cancellations…