If you are buying, selling, or refinancing a property in the next few weeks or months, expect delays. In case you haven’t heard, there is a labor and staffing shortage in the U.S. The ripple effect is has hit the real estate industry in several ways.
Who and what has caused delays?
There are many links in the chain of people involved in a transaction from start to finish. There are an equal number of reasons for delays. Closing delays are not usually intentional. While some delays can be avoided with enough advance planning, it is difficult right now to anticipate every potential setback. We are in a unique real estate market and additional obstacles seem to pop up every week.
Just like restaurants, retail stores, fulfillment centers, etc., there are labor and supply problems in our industry. There is no shortage of real estate agents or title companies ready and willing to keep the wheels of the real estate industry turning. However, the increased demand for homes and loans in 2021 paired with capacity issues in many real estate-related businesses is a formula for snafus.
While most real estate closing are settled on time, the current backlog lies with:
Lenders: Almost a third of closing delays are due to financing issues, according to the 2021 National Association of Realtors report. Lenders are dealing with record volumes and staffing shortages.
Appraisers: The second most common reason for closing delays this year is appraisal issues. Demand for appraisals has been at all-time highs and there is a shortage of appraisers. Increased valuations have made this job more difficult.
Surveyors: Another industry seeing high demand and a shortage of licensed professionals.
Inspectors: Ditto. Everyone is working to keep up with demand.
Underwriters: The huge number of transactions have lending and insurance underwriters overwhelmed.
Repairmen, movers, etc.: Again, labor and supply problems are plaguing multiple industries.
What can you do?
If you are buying, get pre-approved by a lender before signing a contract. Stick with that lender.
Make your contract dates realistic. You may need to plan for 45 or 60 days to close instead of the traditional 30 days we often see in Texas.
Book inspections and repair people as soon as possible. It is the responsibility of both buyers and sellers to obtain qualified professionals for these tasks.
Confirm that the appraisal is ordered at least three to four weeks prior to the closing date. Once completed, the appraisal must be reviewed by the lender and their underwriter.
Ensure that the existing survey is approved or a new one is ordered at least three weeks prior to closing. The title company, lender and underwriter must review and approve any survey for use.
Make sure the lender has everything they need quickly. Lenders often require additional documents throughout the loan process. The quicker they receive them, the quicker they are reviewed and approved.
Communicate often and promptly. Surprise delays or last minute rescheduling is frustrating for all parties.
Work with professionals who respond quickly and can help deal with problems.
Be prepared, patient, and kind with everyone trying to do their job during difficult times.
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