The Selling Real Estate in Chicago Takes One Thing Patience
I found this quote online and thought it appropriate. Over the past several weeks I have spoken about what obstacles buyers have been facing with the current real estate market here in Chicago and how obtaining loans is becoming difficult.
On the flip side of that issue and what I’ll be focusing on tonight, is how these new loan standards are just one more thing that sellers have to deal with. The word patience is one that I seem to be using on a daily basis. It’s almost like a dirty word…it’s something you don’t want to hear even though you know it is the truth. This is never more evident than speaking of the current real estate market.
From the first time I sit down with a prospective seller, I stress their need to be patient. What I speak of at that point is patience to trust their marketing strategy and acquire a ready, willing, and able buyer (AKA: get an offer!!) With today’s standards this could take upwards of 4-6 months. Common sense is thrown out the window when it comes to the timing.
I’ve seen beautiful properties with absolutely nothing wrong with them in the traditional sense just take a long time to sell. So we need patience. Now I’m finding that I need to use the word at a different point in the process. Now we have to use the word even after we’ve found that ready, willing, and able buyer.
In traditional contracts that I see put together, there will more times than not be a mortgage contingency. This contingency period will be anywhere from 3-4 weeks. Terms are laid out and agreed upon such as interest rate, down payment, origination fees, etc.
Back in the good old days, you could feel comfortable that there was little risk involved with this contingency by asking for a pre-approval letter and my job was normally to introduce myself to the lender and ask some questions about the prospective buyer.
With this being done and checking in once a week’s problem was avoided, the contingency was met and we eventually closed on the property. All of this is still performed but those 3-4 weeks are a little more nerve-wracking.
As I’ve mentioned in an earlier thing, that was geared more for future buyers, we’re seeing people with good to great credit and some money down running into what everyone thought was unforeseen problems.
Loan standards are getting more difficult and what looked like a slam dunk is quickly turning into a turnover Basketball reference. With higher down payment demands we quickly look at how this affects the buyer but forget that there is a seller who has “patiently” been waiting for full approval and a clear to close as well.
Sellers are taking their properties off-market for weeks at a time trusting that the buyer’s loan will get approved. Herein lies the problem. It’s not the buyer’s fault. All things point towards buyers getting approved with no real issue.
The issue arises as loan standards change with little notice and new requirements push the buyer out of purchasing the property they were under contract with. We aren’t finding out about these problems until a full loan application has been submitted and sent to underwriting.
It’s funny, I fully intended on writing two paragraphs on this subject and moving on with my life but as usual, I’ve written a short novel. Most of this stemmed from a Chicago Tribune article I’m about to shamelessly plug the point of all this being that if you’re selling in this market please do be patient.
It may not be what you want to hear but I’d rather be the one to say it upfront than telling you things are great and you’re going to sell in 5 days for over asking price. That may get me more initial business but on day 6 of the listing, we may not be friends anymore when we have not sold and I’ll probably be removed from your Christmas card list.
I’d love to hear if anybody has run into this problem from either perspective…buy or sell? As things keep changing I think the best thing we can do is talk to one another about our experiences so we are all prepared and the surprises are minimized. As always spread the word of the blog. I’m here to help and pass along any knowledge I have remaining about my chosen profession. Good Luck and keep up the good fight.