Real estate firm Redfin reports that 12% of homes under contract and awaiting closure in July have been cancelled. There is more than one reason for this.
Real estate company Redfin reports that 12% of homes under contract and awaiting closure in July in the DC area have been canceled, and recent changes in the market are the reason.
A rapid rise in mortgage rates means some buyers may no longer qualify for the mortgage they were approved for when they started looking for a home to buy several months ago. A 30-year fixed-rate mortgage averaged around 3.25% in January; it is now averaging 5.13% for the week ending August 19.
A canceled contract is a disappointment for a buyer, but it can be terrible for a seller.
“It’s very difficult for a seller to pick up the momentum of an ad after it exits the market and then get back into the market,” said Corey Burr, of TTR Sotheby’s International band The Burr in Chevy Chase, Maryland.
“Other buyers and buyers’ agents are going to wonder what went wrong with the transaction, and they’re going to approach this property with less enthusiasm and with potential stigma.”
Contracts are also canceled because there is less competition between buyers, so buyers have a little more control now.
“We are in a much more equal market right now. And buyers are setting up contingencies that we typically see in a normal market. These are inspections, assessments and funding contingencies,” Burr said.
Sellers have had the upper hand in inspections for the past two years, knowing that buyers are unlikely to request one or to have issues their inspector finds fixed. With this change, vendors should reset.
“The cost to a buyer of these repairs, or providing a credit to the seller for the buyer’s closing costs, will be much cheaper than having to go back to the open market and try to capture the same price as they originally had,” Burr said. .
There are 21% fewer current home listings in the DC-area market than a year ago, and 24% more homes listed for sale.
The number of homes for sale that have been on the market for more than three weeks is the highest in more than two years.
Like OMCP on Facebook and follow OMCP on Twitter and Instagram to start a conversation about this article and others.
Get the latest news and daily headlines delivered to your inbox by signing up here.
© 2022 OMCP. All rights reserved. This website is not intended for users located in the European Economic Area.