Buyers have pre-qualified with a lender and have begun their home search. Buying a home is such an amazing adventure in life!!
The real estate transaction encompasses a wide range of professionals including brokers, home inspectors, appraisers, surveyors, title officers, lenders and more. Nearly every home sale utilizes these professionals to get from list to close.
In today's "hot" real estate market buyers will quickly discover the path to home ownership holds many bumps and delays. Currently, the inventory of homes for sale is limited. New buyers are often excited to find a home they like and make an offer. However, they may get out-bid or end up in a bidding war. Many times, buyers need to be prepared to pay over the asking price to get a home under contract.
Once buyers do get a home under contract, the next step is scheduling a home inspector. As of 2020 Home Inspectors must be licensed in the state of New Mexico, and there are only a limited number of licensed inspectors. It is common for a buyer to have to wait a week or two to get an inspection scheduled and a few days longer for the inspector to generate the report. Once the home inspection is complete, a buyer should sit down with their Realtor and determine what objections they wish to negotiate, if any, based on the home inspection report.
Most home buyers will require a mortgage and the lenders require an appraisal. As soon as a lender gets the buyers initial paperwork and credit report they will order an appraisal by submitting a request to a rotating system for Appraisal Management Companies. An AMC works with lenders and appraisers to facilitate the ordering, tracking, quality control and delivery of appraisal reports. Again, there are a limited number of appraisers who work in our area. The volume of appraisals has increased due to the number of homes under contract and homeowners who are refinancing. This creates delays in getting the appraisal completed.
Appraisers, local and nationwide, have been dealing with an overload of orders for more than a year in the current market. Some properties are more difficult to appraise than others due to the lack of comparable sales. Appraisers use past sales of like properties to determine the market value of a property. When you get into the upper price ranges, or more rural properties – such as Cliff or Lordsburg, there are fewer comparables, and often appraisers will not accept the job because they cannot locate comps for the appraisals. Deals sometimes fall through because of the lack of comps in certain geographical areas.
A Lender will often require that a property be in good condition to meet lending standards. Depending on the type of loan the buyer is applying for, there cannot be peeling paint, steps or decks that are rotting, no tripping hazards such as carpet that is torn, a good roof that is not leaking or at the end of its life and several other health and safety standards. When a real estate professional takes a listing, they should look for these issues and discuss how they can be handled by the seller before listing, or during the contract process, if the appraiser calls out these issues. These issues must be resolved for the loan to close. If the home is a fixer upper, likely it will require a cash buyer rather than a buyer using a loan. This will limit the number of buyers for a fixer upper property.
The next component of the home buying journey is the title binder. A title company is hired to complete a title search on the property. The title officer is looking for liens, judgements, lawsuits against the property, an easement that is needed to access the property, an estate in probate and many other issues. The title binder outlines the information found on the property and what needs to happen for the property to transfer with a clean title. If there are issues, they need to be resolved. Title companies could be delayed due the number of title orders in a busy buying and refinancing market.
Many lenders will require a survey. Sometimes a previous survey can be used if it is less than 10 years old and there have been no changes to the property during that time i.e.: storage sheds added, fences added/taken down, etc. If a new survey is required, this can create yet another lull in closing. There are limited number of licensed surveyors who work in our area. In a "hot" market surveyors may see their workload doubling thus creating a large backlog of orders.
A buyer may incur additional costs as a result of these delays. If they locked in their loan at the start of the process and it is about to expire before they can close, they may have to pay a charge to extend their lock and preserve their low interest rate.
Once all the buyer's documentation is complete, objections are resolved, a satisfactory appraisal is received, and a survey is delivered, the loan then goes to final underwriting with the lender. Underwriting can take a few days. Meanwhile the lender and title company begin preparing the final closing documents. This process can take another week or so depending on work load.
It is finally closing time! The buyers schedule an appointment to sign documents, as does the seller. Signings can be at the title company or online with e-signatures. Once all parties have signed, monies collected, the sale is recorded at county clerk's office. At this point ownership transfers and buyers get the keys to their new home. What a journey! Currently buyers can expect the entire process from offer to closing to take 60 days. Some transactions can be done in 45, and more difficult transactions may take longer than 60 days. It can be a nerve-wracking process for all involved, but worth it in the end!
While in the current "hot" real estate market, it could be said that there is a shortage of inspectors, appraisers, and surveyors. These jobs cannot be filled easily in a few weeks or months' time. It requires a minimum of two years to become licensed for some of these careers. It is a conundrum in the industry.
When the market is slow, there is not enough work for them to make a living, when it is a crowded marketplace and the market is busy, there are not enough licensees to handle the influx of business. These are not issues easily solved!
A real estate professional will help guide sellers and buyers through the process by informing them, in advance, of any of these possible delays and help to set realistic expectations in every transaction. They have the skills and knowledge necessary to be a trusted advisor during an important financial transaction for a buyer and seller. A Realtor works behind the scenes to ensure a transaction is as seamless as possible.
Visit www.silvercityrealtors.org to find a local REALTOR®, a member of the National Association of REALTORS® to learn more.