Realities of the New Orleans Homebuying Process
The drama of selling a home is a play in two acts, which can vary greatly in length.
The first act begins when a homeowner decides to sell and ends when the buyer signs the contract. The second act ends with the closing when the actual sale happens.
A quick cash closing can take as little as 10 days, but when a loan is involved, the selling process can take 45 days or longer.
In the New Orleans market in April 2017, homes spent a median of 67 days on the market before selling, according to Realtor.com. The Days on Market, or DOM, figure varies seasonally; in January 2017, the median New Orleans DOM was 90. In the past three years, the lowest monthly DOM was 60 in July 2015.
Why Does Selling a House Take So Long?
Price, location, and condition are the three key variables affecting the length of the first act, the process of creating a match between the seller and buyer, Elizabeth Weintraub writes for TheBalance.com.
Priced to Sell
Homes in lower price ranges often sell faster than those in higher price ranges, because there are more people who can afford lower-priced homes. Pricing a home a bit under market value may also attract multiple offers, which could bring a higher price in the end.
The strategy of setting a higher initial price for a home with the expectation of lowering the price later is risky, Kris Berg writes for HGTV.com, because new listings get the most attention and all active buyers receive them. Michele Lerner of Realtor.com reports the findings of a Virginia real estate company that found that homes that sold within their first week on the market sold for an average of 2.08 percent above the list price, while those that lingered on the market four months sold for an average of 11.53 percent below their original asking price.
Location, Location, Location
Demand will be higher for homes in desirable neighborhoods near high-quality schools. If there are both pros and cons to your location, make sure that your listing highlights the advantages of the neighborhood, with photos of nearby recreation, dining, and shopping areas.
Move-In Ready Versus Fixer Upper
Cluttered homes or homes in need of repair will sell more slowly because it is harder for buyers to see past the mess and imagine themselves living in the home. It almost always pays off for New Orleans homeowners to make necessary repairs before putting a house on the market, rather than offering an allowance for repairs, because buyers will want an allowance larger than the cost of the repairs, Mark Ferguson writes on InvestFourMore.com.
In a sellers’ market, when there are more buyers than sellers, homes can sell in less than a week, and sellers may have the opportunity to choose among multiple purchase offers. In a buyers’ market, buyers are likely to pass on homes that are not a perfect match for their needs.
Once a house is under contract, the factors that come into play include:
- Title insurance
- Home inspection
- Receiving a loan, which usually requires an appraisal.
Appraisals Take Longer
A number of factors are making appraisals take longer. To comply with rules in the Dodd-Frank Wall Street Reform and Consumer Protection Act, Loan underwriters are asking for more information from appraisers than ever before Rory S. Coakley reports in The Washington Post.
At the same time, appraisal management companies have emerged as firewalls between bank lending officers and appraisers. Despite their advantages, such firewalls increase the chances that the chosen appraiser will have no familiarity with the specified neighborhood.
Sellers can speed up the appraisal process by working with the appraiser, providing a copy of the property survey, a list of recent home improvements, and copies of past appraisals.
Time to Close Decreases
In April 2017, the average closing time for all loans was 42 days, down from 43 days in March, according to the Ellie Mae Origination Insight Report. Two key factors in the decline in closing times are the increase in the proportion of purchase loans to refinance loans (purchase loans made up 63 percent of the total in March), and increased automation of mortgage processes “to improve efficiency, quality, and compliance,” Ellie Mae President and CEO Jonathan Corr told Mortgage News Daily.
If you expect delays in selling your home through traditional means, Big Easy Buyers offers resources for New Orleans homeowners who want to sell their house fast and move on with their lives. Contact Big Easy Buyers at (504) 513-7878 or by filling out our quick contact form to set up an appointment at your property.