This week our listings saw an average of 2.2 showings each. This pattern is slower than we hoped for considering the spring season. However, based on the feedback we’ve gotten, buyers seem to be a bit more prepared to pull the trigger than they had been during the winter months.
As the market slowly begins its recovery, many people are asking questions about the difficulty around obtaining financing. The media has created a general consensus that banks still aren’t lending. Though its true that financing has become more difficult to obtain, banks certainly are still lending.
From a Realtor’s point of view, there is no doubt that financing has become a lot more difficult. There are two major factors that have affected my ability to close a real estate transaction with regards to financing. 1) The lenders have significantly tightened their guidelines. You’ve got to have good credit, money to put down, and a strong debt to income ratio. Underwriters are taking a much harder look at these criteria within a credit file before issuing an approval. 2) The record low interest rates have created a surge in refinance applications and the understaffed lending institutions are struggling to keep up with demand.
These two factors combined are making it very difficult to close in 30 days which used to be considered normal. Today it does not seem uncommon for underwriting to take twice that long with some lenders.
As a buyer, seller, or a real estate professional, the moral to this story is: have patience. These turbulent times have created many changes in our industry. There are lots of bugs to be worked out in what has become a new financial system. As the systems become more routine, things will return to a more fluidl process. But for now, patience truly is a virtue.