NAR: Financing and Appraisals Cause Transaction Delays

By Kerry Smith

A lot of things can go wrong between contract and closing. NAR’s latest survey identifies financing (30%) first, but appraisals ties “Other” (21%) for third place.

CHICAGO – A lot of things can go wrong between contract and closing. Of transactions that are delayed, the top reason is some kind of problem with the financing.

The appraisal can also cause transactional stress and threaten to derail the process. Twenty-one percent of Realtors® said appraisal issues impacted sales contracts, according to the National Association of Realtors®’ (NAR) October 2020 Realtors Confidence Index Survey. However, “Other” things also caused 21% of the delays.

Problems that delayed contract closings

• Financing issues: 30%

• Appraisal issues: 21%

• Other: 21%

• Title/deed issues: 10%

• Inspection/environmental issues: 8%

• Contract contingencies: 6%

• Buyers lost their job: 2%

• Distressed property issues: 1%

• Insurance issues: 1%

Factors that terminated contract closings

• Appraisal issues: 13%

• Financing issues: 12%

• Other: 11%

• Inspection/environmental issues: 8%

• Title/deed issues: 4%

• Contract contingencies: 4%

• Distressed property issues: 1%

• Insurance issues: 1%

• Buyers lost their job: 1%

Overall, 65% of contracts settled on time in the latest report, with 30% closing after a delay and 5% failing to close.

“The pandemic continues to impact how people live and work,” the report’s authors note. “Sixty-two percent of respondents reported they had a client who was looking for work-from-home features. Thirty-one percent of respondents reported a higher share of clients who live in the city who want to purchase a home in the suburb or rural area compared to the share in January 2020.”

© 2020 Florida Realtors® Reprinted with Permission

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