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Dealing With the Pitfalls That Slow Down Real Estate Transactions

Whether you are buying or selling, you will notice a definitive change in the real estate industry lately with respect to how smooth the entire process is.  Where once a long time ago a buyer could walk into a mortgage lender’s office and walk out within a week with a bank note in hand for his or her new home, things have now changed.  Now we are witnessing a major shift in the way industry professionals handle home buying and selling endeavors.

What exactly is happening that causes this change in real estate practices?  To understand and also learn how to cope with the lending and purchase procedures of late, we go through some major pitfalls and explain how to manage each.

Documentation, Documentation, Documentation!

Gone are the days when it was easy to get no doc loans or low doc loans. In fact, it is quite the opposite these days. More documentation and verification is required today, than ever before, in order for a homebuyer to qualify for a loan.  Not only that, lenders are using third-party verification services, taking added precautions to verify that information provided by borrowers is correct – and then they triple check it all.

Certain guidelines are also more closely followed than from before, such as income, length at previous address, income-to-debt ratio and of course credit scoring and profile.  In general, as a result of this entire extra load being added to the process, the underwriting process takes far longer than it used to just a few years ago.

Appraiser’s Value of the Home and Home Inspections

A factor that largely contributed to the decline of our real estate industry in 2007 was the gross over-value of many homes at that time.  One of the safeguards being taken by lenders is to stringently adhere to the home appraiser’s recommendations.  The home is scrutinized in great detail and every little thing that could potentially pose a problem in terms of the condition of the home, is reported.  One way for sellers to avoid delays on this end is to preempt any potential issues by having them repaired or renovated prior to the appraisal process.

Similarly, home inspections can yield significant delays if any noteworthy issues needing attention surface during the inspection.  Given the current soft market, buyers expect far more concession on the part of sellers – an area that sellers often find difficult. If managed before the home is listed, significant delay can be avoided.

Bank-Owned Properties and Short Sales Go Slow

Unlike a straight sale, properties that involve banks as owners or those that require a bank’s hand in the decision-making process, naturally take a lot longer.  In some cases where there is more than one lien holder, as in with some short sales, the process can take months or even a year.  Though patience is generally the only thing a buyer or seller can practice in this case, expecting delays and being prepared for them can make it easier.

Surprisingly, sometimes the parties involved in the transaction are also cause for delays.  Whether it is a buyer that is unsure of whether to make the purchase or the seller that wants to investigate all tax options or be completely sure they are ready to sell their home – these things add more time to the process.

Working With Unverified Contractors or Vendors

Renovations and fix-ups are an integral component of selling a home.  Unless a reputable contractor is used, things can and do go wrong.  Realtors have a wide network of preferred vendors, suppliers and service companies that they have worked with and referred for years.  Homeowners can avail this tool and utilize the assistance of their real estate agent to coordinate the preparation of their home for sale.
Now, more than ever, buying (or selling) a home takes a long time.  It is rewarding nonetheless and as long as you can be patient throughout, it all ends up being worth it!

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