If you have ever bought or sold properties, then it is quite possible that you have experienced a delay in the closing at some point. Although most closings occur on time, there are various circumstances in which the transaction must be pushed to a later date or terminated completely. The latest Realtors® Confidence Index analyzed the most common reasons for delayed home closings in February 2021. Overall, 26% of closings faced some sort of delay. Meanwhile, 6% of contracts needed to be completely terminated. We discuss the findings below:
Top reasons for contract termination
Of the overall 6% of contracts that needed to be terminated, the following reasons were the most common cited:
- Appraisal issues (11%): This should not come as a surprise given the current market. With prices rising so rapidly, it has become increasingly difficult for appraisal values to keep up. This is resulting in more properties appraising for less than the contract sales price.
- Obtaining financing (10%): This is a common reason cited for contract cancellations in any market. In the current competitive market, some sellers are even opting to only consider cash offers due to this.
- Home inspection/environmental issues (10%): Home inspection items are common stumbling blocks for any transaction. Some likely items that result in contract cancellations include, but are not limited to, roofing, electrical, or plumbing issues. The easiest solution in many of these circumstances is for the seller to offer a discount off of the sales price in order to account for these issues, but not all buyers are willing to accept this.
Top reasons for contract delays
Similar to the reasons given for contract cancellations, some of these items are also responsible for contract delays as follows:
- Financing issues (29%)
- Appraisal issues (23%)
- Title or deed issues (13%)
- Home inspection/environmental issues (12%)
- An item related to a contract contingency (5%)
- An issue with buying/selling a distressed property (2%)
- Insurance related issue (2%)
- Loss of employment for buyer (2%)
- Other issues (13%)
Needless to say, we are in the most competitive market that we have seen in many years. In fact, respondents in this Realtors® Confidence Index study reported an average of four offers for every home that was sold. In addition, homes listed for sale typically sold within 20 days. This is the fastest rate since May 2011, when the National Association of Realtors began tracking this data. For perspective, the average time it took for a home to sell a year ago was 36 days.
Even in a red-hot market, home sellers still want to give themselves the very best chance of a successful closing. With this said, it is a good idea to inspect a home in order to make any necessary repairs prior to listing it for sale. A little preventative maintenance can go a long ways once the property is under contract.
Are you thinking about selling your South Florida property? Did you know that Live South Florida Realty, Inc. listings sell significantly faster than the average listings in the market? Contact us today for a free consultation.