Archive for the 'Contracts' Category
Friday the 13th
The other day we were talking about our current pending deals, and noted that we both have closings scheduled for mid August. Closing in the middle of the month is pretty common, but we discovered that our two deals have something in common. Neither us, nor our clients, wanted to close on Friday the 13th.
Friday is the most common day for real estate closings in Hartford County. In looking at data for over 30,000 single-family and condo closings since the beginning of 2007, there are more than twice as many closings on Friday as any other day of the week. The reason we often hear for a preferred Friday closing is so that people have time to move in over the weekend before returning back to work on Monday.
Are we the only agents with an aversion to Friday the 13? No, no we’re not.
In weeks that contain a Friday the 13th (red bars below), there is a noticeable decrease in the number of Friday closings. Clearly not everyone is afraid of the day, but there are others who would prefer not to risk it. The chart shows that many buyers choose to close on Thursday the 12th, while some push it out to Monday the 16th.
We expected there to be more of an aversion to Friday the 13th closings than the data shows. Especially since many of the agents we know are mildly superstitious (no sense putting clients at risk of bad karma/energy/whatever). Maybe people don’t realize that the closings they schedule on a 13th are also on a Friday. Or maybe they’re too embarrassed to admit their phobia. Or maybe we’re just a little too sensitive to this sort of thing.
Would you schedule a closing on Friday the 13th?
Extending the Home Buyer Credit
The National Association of Realtors (NAR) has been leading a push to get part of the Federal Home Buyer Tax Credit extended. But don’t get too excited – their proposal won’t give allow anyone new to claim the credit.
Before diving into the details, here is a quick review of the current rules of the game:
1. First time buyer or existing owner (extra criteria).
2. Binding purchase contract by April 30, 2010.
3. Closing by June 30, 2010.
In a June 11th press release, NAR argues that 180,000 buyers met the first two rules but are at risk of missing out on the credit because their lenders will not be able to underwrite the mortgage in time. In fact, they state that “as many as one-third of qualified applicants have been notified by their lender that their mortgages will not close before June 30th.” NAR would like to protect these buyers by extending the deadline for closing to September 30th.
NAR’s main concern is that the surge in purchases at the end of April is overwhelming lenders. Others seem to believe that the tighter lending standards and the new appraisal rules that fall under the Home Valuation Code of Conduct (HVCC) are a big part of the delay. A number of articles, including Senator Reid’s press release on the issue, state that there is “growing concern” that short sales will be impacted.
We have heard about mortgage delays with some of the larger national lenders and with special programs (like CHFA) that require additional steps or approvals. However, buyers using standard mortgages with local and regional lenders are seeing their loans go through without much trouble. Appraisals can be an adventure when someone is assigned from outside of the area (like from Rhode Island!), but they have occurred in an expeditious manner. Short sales are a whole different animal, and the concerns identified seem to lead to a discussion about when the purchase contracts becomes binding – not a debate for today.
Buyers in Greater Hartford are seeing some of the same challenges that have been reported in the country overall, especially when they use national lenders. Hopefully we won’t see too many closing delays as the month of June comes to an end. And if the “closing by June 30th” rule is relaxed, that will help ensure everyone gets the incentive they were expecting.
Real Estate Activity Decrease by Town – May 2010
May is a busy real estate month. More deals are done in the spring than in other times of the year, and the month of May is right there in the middle of the spring. In most years, the months of April and May have the two highest totals of contracts written (buyers and sellers agreeing on a sale). May usually edges out April, but not always. It depends on how the holidays fall, and whether there are other major events that distract buyers from the real estate market.
The chart below shows the contracts written by month for single-family homes in Hartford County. Data is shown for all of 2004 and the first five months of 2010. All data comes from the Connecticut Multiple Listing Service, and is considered reliable, but not guaranteed.
May didn’t win this year, which isn’t much of a surprise. Everyone already knows why … tax credit. Nuff said.
But how about the individual towns? Did all of them show the same fall-off in activity? Did the tax credit matter more in some towns than in other towns?
This table shows the number of single-family home contracts written for each town in Hartford County. The percent change in the market activity between May and April is shown in the final column, and is used to sort the table.
There is a huge range of results; from apparently no impact in Burlington all the way down to a 75% decrease in activity in Canton, East Windsor, and Wethersfield. Scanning through the percent difference column, it’s interesting that there are towns throughout the whole range – they are not bunched together.
The results also don’t seem to follow median sales prices. Of the more expensive markets, Farmington, Simsbury, and Glastonbury showed smaller declines than most towns, but Avon had one of the largest. Of the less expensive markets, Bristol, Hartford, East Hartford, and New Britain were pretty evenly distributed throughout the middle of the range.
Despite the broad decrease in activity, buyers and sellers are still out there looking for homes. Buyers may have more of an advantage because there is less activity, but not in all cases. Desirable properties continue to sell with multiple offers if they are priced appropriately – just last week we had listing and buyer clients participate in multiple offer situations.
What’s your take based on your search or sale?