Economic uncertainty leads to canceled home contracts - Washington Post

Or are they essentially fouling out of the game, unable to close deals because of financing and credit issues. According to the National Association of Realtors, one of every six Real Estate agents polled in June reported having signed contracts canceled before closing — up from just one in 25 the month before. The typical monthly cancellation rate over the past 16 months has ranged in a narrow band between 8 percent and 10 percent. Lawrence Yun, the chief economist of the realty association, says that the sudden swing is surprising and worrisome, and that there are no hard statistics available on the causes. The most likely suspects, Yun says, are low-ball appraisals and tough mortgage underwriting rules that knock buyers out of contracts through mortgage contingency clauses. In turn, brokers say, that is making buyers less willing to risk a major purchase, making them pickier and more demanding when defects are found in home inspections, and frequently leading to contract cancellations for relatively minor reasons. As a result, he says, “they’re terminating contracts that in the past would have gone to closing. Or maybe a floor covering is worn and should eventually be replaced. Previously, buyers who truly wanted a house might let those issues pass; now they want the contract price reduced in compensation, or they want the replacement or repair made before closing. Some sellers are willing to negotiate, but others think the contract price on the house is as low as they can go. If the parties can’t bridge the gap, the deal disintegrates. Buyers negotiating with banks often wait months to get an answer on their offer, triggering repeated extensions of the contract terms. Eventually buyers lose patience, throw up their hands and say forget it. That price, Smith says, was well in line with recent sales of similar units. If your comments or those of another user measure up, please let Post editors know. If your comments or those of another user measure up, please let Post editors know. Get a badgeNominate someone for a badge Washingtologist Washingtologists consistently post thought provoking, timely comments on events, communities, and trends in the Washington area. If your comments or those of another user measure up, please let Post editors know. Post Forum Post Forum members consistently offer thought provoking, timely comments on politics, national and international affairs. If your comments or those of another user measure up, please let Post editors know. Get a badgeNominate someone for a badge Post Recommended Washington Post reporters or editors recommend this comment or reader post. Sign in here You must be logged in to recommend a comment. Sign in here Comments our editors find particularly useful or relevant are displayed in Top Comments, as are comments by users with these badges: . Replies to those posts appear here, as well as posts by staff writers. More about badgesGet a badge To pause and restart automatic updates, click "Live" or "Paused". If paused, you'll be notified of the number of additional comments that have come in. Comments our editors find particularly useful or relevant are displayed in Top Comments, as are comments by users with these badges: . Replies to those posts appear here, as well as posts by staff writers. The Post MostMost-viewed stories, videos, and galleries in the past two hoursMost PopularThe great divideWhy no vote tonightWonkbook: Boehner failed. Realtors