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Getting New Construction to Closing-A Daily Challenge

By Cindy Jones

Real Estate Agent with Integrity Real Estate Group

March 04, 2009 11:26 AM

One of my listings is actually 15 listings in a waterfront condominium building. Sales have picked up since the beginning of 2009 but getting them to closing has been more of a challenge.

It has nothing to do with the buyers deciding to pick up a walk away from a deal, it is the lenders continuing to move the bar. With the new underwriting requirements and the fear that new construction, especially condominiums are toxic the hoops are unbelievable. Our first two deals of 2009 closed without a hic-cup but the next three have been caught in an endless loop.

Getting New Construction Loans To Closing Condo questionnaires, condo documents, condo budgets, legal review of title work, litigation review, occupancy permits and the list goes on and on. Even after all of the requirements have been met the lenders may still turn the buyer down. Today one of the lenders backed out of their deal, after keeping the buyer on the edge of their seat for almost 3 weeks. The only saving grace is that we have now located a lender who wants to work with us AND is willing to close our "open" deals in record time.

As we read through all of today's options to bail out homeowners who are in over their heads the effect on current buyers is evident. A good credit score and 20% down won't necessarily buy you that new construction condo that you want. If the lender doesn't think they can sell it and the MI companies won't touch it the buyer can't buy it.

Another day in the real estate trenches.

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Julie Chapman

Julie Chapman Broker - Ormond Beach, FL

Daytona Beach Shores, Florida

It is too bad that even if the economy were rebounding that the lenders that are being bailed out will continue to stop sales of construction - sales of construction create jobs - our economy needs jobs......does anyone see a problem with this cycle?

Mar 04, 2009 11:31 AM

Adam Keatts

Wells Fargo Home Mortgage - Walla Walla, WA

I am a lender and I feel your pain. I have turned files into underwriting that were perfect at the time to find out that in a weeks time when the underwriter finally gets to the file, guidelines have changed and the file has to come back to me for additional documentation. This never happened before. Just a sign of the times I guess.

Mar 04, 2009 11:35 AM

John Mulkey

TheHousingGuru.com - Waleska, GA

Housing Guru

Most lenders seem to have gone into a protecting their ASSets mode and have little interest in helping the country recover this crisis.

Patricia Kennedy

RLAH@properties - Washington, DC

Home in the Capital

Cindy, my bet is the PMI companies are running scared right now. But good credit and a real down payment ought to do the trick! Yikes!

Mar 04, 2009 12:47 PM

Cindy Jones

Integrity Real Estate Group - Woodbridge, VA

Pentagon, Fort Belvoir & Quantico Real Estate News

Julie-it is a vicious cycle. We now have qualified buyers and in some cases the mortgage companies are running scared. So some buyers are being asked to sit on the sidelines when all they want to do is buy a new place to call home.

Mar 04, 2009 10:50 PM

Adam-both of the buyers have everything you would think a lender would be begging for. Good credit and down payments. Instead they seem to be being punished because the "system" broke down.

Mar 04, 2009 10:52 PM

John-nicely put!

Mar 04, 2009 10:53 PM

Patricia-one lender said "if we can't sell it we won't write it". Time for the mom & pop bank to come back in style.

Mar 04, 2009 10:54 PM

Naoma Doriguzzi

Virginia Beach - Virginia Beach, VA

New Media Director

Cindy - It is so tough out there and you have to keep up with the guidelines daily - especially the new construction. Like you said the condo requirements have changed as well. Glad to hear you were able to find a new home and still get closed!

Mar 05, 2009 08:12 AM

Khash Saghafi NMLS

Liberty Home Mortgage Corporation - Cleveland, OH

Mortgage Loan Officer, Cleveland OH NMLS 1114762

Hey Cindy,

Your post hits it right on the head as far as changing guidelines and increased scrutiny in underwriting goes -- if it cannot be sold and the MI companies do not want to touch it, you will have a very difficult time closing the deal. Educating people on those points will unquestionably result in more patience and understanding on everyone's part causing the transaction to go smoother even though it might not feel like it.

Mar 09, 2009 02:16 PM

Khash-You are right that it just takes patience. The good news is that there are some lenders who are able to portfolio loans until a project reaches the appropriate pre-sale requirements.

Mar 10, 2009 01:03 AM

Getting New Construction to Closing-A Daily Challenge

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