The Biggest Hurdles Causing Closing Delays
March 1, 2021
Financing and appraisals are the culprits causing the most delays in home sales or terminated contracts, according to the latest REALTORS® Confidence Index survey.
With little supply on the market, homes are continuing to sell quickly—typically within 21 days—and are garnering an average of nearly four competing offers, according to the report. Home prices have been rising by double-digit percentages over the past year, which could help explain some of the appraisal issues that are emerging.
The REALTORS® Confidence Index survey, conducted by the National Association of REALTORS®, is based on responses from more than 4,000 real estate professionals nationwide about their recent real estate transactions. The latest report reflects responses about January transactions.
Sixty-five percent of sale contracts were settled on time, but 29% faced a delay, the survey shows. Only 6% were terminated prior to settlement. The top issues that prompted a delay in settlement in January were:
- Issues related to obtaining financing: 22%
- Appraisal issues: 20%
- Home inspection/environmental issues: 11%
- Titling/deed issues: 11%
- Contingencies stated in the contract: 6%
It was rarer in January for contracts to be termination prior to settlement. But these were the top issues cited by REALTORS® for why a contract was terminated:
- Appraisal issues: 11%
- Issues related to obtaining financing: 9%
- Home inspection/environmental issues: 9%
- Titling/deed issues: 5%
- Contingencies stated in the contract: 3%
Most transactions, however, are resulting in quick sales. Fifty-six percent of REALTORS® surveyed report that the work-from-home trend has prompted more buyers to search for properties with an extra room, a finished basement, and more square footage, increasingly in suburban, small town, rural, or resort areas, according to the REALTORS® Confidence Index survey. The pandemic also has spawned a slew of new homeowners. REALTORS® reported that 45% of their transactions came from buyers who were renting an apartment or house prior to the sale and 12% came from those living with their parents, relatives, or friends.
Updated: April 19, 2021