What is the biggest problem home buyers face in this real estate market? The recurring problem and the number one problem by far is at the lender end of a transaction. I recently had a client who planned to buy a home in Sequim for a long time. When the time came, we looked at his short list of homes and we did find the perfect home. He had a nearly perfect credit score and a huge 30% down payment. The home inspection went smoothly, the septic inspection passed, the well inspection passed with flying colors, and we proceeded toward closing. Until the problem.
Biggest Problem Home Buyers Face Example 1
The out-of-town lender didn’t order the appraisal until a week before closing. That meant there would not be enough time for the appraiser to physically inspect the property, compile his data, and complete and submit his appraisal report to the bank. We would need a closing extension. Big problem. The sellers had an FHA loan and if we went one day past the end of the month, the sellers would have to make another month’s payment, and these FHA loans do not prorate interest. So one day past the end of the month meant another $1,500 mortgage payment. The seller refused to pay it, saying the buyer’s lender caused the delay. The buyer refused to pay it saying it was the seller’s own loan that required an additional payment.
Biggest Problem Home Buyers Face Example 2
In another transaction I sold a home to a buyer who qualified and was approved for the loan. The appraisal came in good, right at the purchase price. Then the underwriter decided he didn’t like the comps on the appraisal report, so he killed the loan.
Biggest Problem Home Buyers Face Example 3
And in another transaction the buyer was eminently qualified for the loan, the appraisal came in above the purchase price, and all inspections were good. But two days before closing, the underwriter complained about something that had never showed up before. It was an old debt, but not even my client’s debt. He co-signed a loan for his son years earlier. The son’s home was later foreclosed, and it was the second loan that was wiped out by the foreclosure that the underwriter picked up on. My client’s loan underwriter would not fund the loan until that old debt was paid. Another lender issue threatened to kill a transaction at the 11th hour.
Of course you must be proactive and diligent to get to closing on any real estate transaction, but there are some things totally outside your control, and some of those things crop up at the 11th hour. I thought you would like to know that the biggest problem home buyers face in the real estate market today are at the lending end of the transaction.
Last Updated on September 19, 2019 by Chuck Marunde
