December 29, 2011
U.S. Pending Sales Up 5.9% In November But Failed Closings Loom
As prices continued to tick down in October, the National Associations of Realtors Pending Home Sales Index increased 7.3 percent from October to November, up 5.9 percent year over year.
Keep in mind, however, that NAR's Index reflects contracts not closings and the percentage of Realtors reporting failed contracts remains at 33 percent versus 9 percent at the same time last year.
In the West, the Pending Home Sales Index jumped 14.9 percent from October to November, up 2.9 percent year-over-year.
∙ S&P/Case-Shiller San Francisco: Homes Slip, Condos Dip In October [SocketSite]
∙ Pending Home Sales Rise Again in November [realtor.org]
∙ U.S. Pending Sales Jump In October As Did Reports Of Failed Closings [SocketSite]
∙ From Bad To Worse And Business As Usual At NAR [SocketSite]
First Published: December 29, 2011 9:45 AM
Comments from "Plugged In" Readers
What are the primary reasons a contract would fail and why is the rate so high all of a sudden? Any realtors here have an idea?
Posted by: Elmer J Fudd at December 29, 2011 12:24 PM
@Elmer: Lending standards are much stricter now than they were in the, say, 2004-2006 time period. The easy part is putting in an offer/bid on a property; all you have to do is sign at the line and say, "This is how much I'm willing to pay for it." But what one is willing to pay and how much the bank(s) will actually lend to the person are two completely different issues. Lenders now require heavy documentation of income (and a substantial down payment) in determining a borrower's credit worthiness, the way it should have always been. So I bet contracts are falling out at the loan(-contingency) process. It is increasingly very difficult, verging on impossible, to qualify for a loan nowadays. The days of free, easy money are over -- thank God.
Posted by: QualifiedBorrower at December 29, 2011 1:42 PM
Interesting, I figured most people are already pre-approved for a loan when making the formal offer.
Posted by: Elmer J Fudd at December 29, 2011 2:23 PM
Some fails, in today's environment, have more to do with the house not appraising at a level the bank is comfortable with.
Pre-approval is not a loan guarantee. Assuming your financial and employment circumstances have not changed since getting pre-approved (aka, receiving a Good Faith Estimate from the Bank) and the house appraisal meets the banks lending requirements, the risk of a fail are greatly reduced.
Posted by: JustLooking at December 30, 2011 9:01 AM
Yeah, the appraisal part of it has changed since the bubble days. The appraisers are being a lot more conservative in their valuations.
Posted by: Rillion at December 30, 2011 9:28 AM