3 ways home buyers can protect themselves
Home sales deals are up in markets across the country, but getting those transactions to the closing table can be a challenge.
Following a wide swing down in April and then up in May, pending home sale contracts were up 2.4% in June, according to the National Association of Realtors.
Sales activity increased in the West and South and declined in the Midwest and Northeast.
All the regions are up compared to this time last year, when the housing tax credit had just expired.
What the data tells us is that more people are signing contracts to buy homes, but buyers are having a hard time getting those deals completed because lenders are really picky about who’s getting a mortgage, and appraisers are low-balling home values.
If you’re shopping for a home, there are three things this data is telling you to do:
- Lending standards are tighter than Kim Kardashian’s dresses, so add a contingency to your contract saying you don’t have to close the deal if you don’t find mortgage rates and a downpayment you can afford.
- Offer to close in 30 days, but have the option to extend the deal another 30 days if the lender is still waffling a month after you made your purchase offer.
- Decide with the seller up-front how you’re going to handle it if the appraiser says the house isn’t worth what you offered to pay for it. Try to get the sellers to agree that you only have to pay the appraised value so when the appraiser low-balls the house, you benefit.
If you’re a seller, there’s good news in the data for you. NAR Chief Economist Lawrence Yun thinks the two months of increasing pending sales means actual sales will rise.
The picture painted by the data varied by region:
The Pending Home Sales Index in the Northeast slipped 0.4% in June but that’s still 19.4% higher than June 2010.
In the Midwest the index fell 3.7% in June but that’s 26.4% above a year ago.
Pending home sales in the South increased 4.4% and are 19.1% higher than June 2010.
In the West the index rose 6.4% and that’s 16.4% above a year ago.
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