WHY 35% OF ESCROWS FALL OUT AND DON'T CLOSE

When I speak to a potential client that had previously tried to sell their home and it has fallen out of escrow, they often will tell me that people are having trouble getting loans and the economy is just so bad right now. I can completely understand why they think that and where their perspective comes from. At the same time, the reality is that "economy and loan issues" most likley have nothing to do with the fact that the home fell out of escrow. Is this my opinion? Of course not. I try to not have opinions about most things as opinions are much to subjective.

Here is where I come up with my conclusion:

#1 - In the year 2009, San Diego County averaged 2500 homes sold each and every month (including December)
#2 - These sales represent a wide price point. In other words, the bulk of the sales do not represent a specific price point and not others.
#3 - Most any borrower with a FICO above a 600 FICO can obtain financing.

So - considering these two facts, why has the fall out rate of real estate closings increased? There are a couple reasons. First, because it has become much more dificult to "close" a transction. By that I mean that Fannie Mae, Freddie Mac and FHA tend to require much more documentation and are doing much more in their research prior to funding and closing a loan. Take this and couple it with the emotions that buyers and sellers experience and it usually equals chaos. I wish you could see the craziness that goes on behind the scenes of a closing. My wife often tells me, "It seems like your escrows fall apart 2 times before they close" and she is very right. Now let's play out a typical scenario:

Sally Smith decided after the kids were grown that she wants to make some extra income and she decides to get her real estate license. Flash forward 15 months; if Sally gets average results, she will sell around 2 homes per year. At this point, Sally has sold 2 homes and now she is handling your sale. In the middle of the transaction, she is delaing with all these issues. She is very inexperienced and is getting very flustered and stressed out. When agents get flustered and stressed out, the transaction becomes stressed. The buyers start to get negative feelings about the home and that is precisely when things start to fall apart.

You see buyers buy 80% based on emotion. If the agent cannot handle issues with ease and keep all parties at bay, THE TRANSACTION WILL FALL APART. TRUST ME. I SEE IT EVERYDAY!

I am both proud and thankful for the fact that at the time of this writing, I have closed 100% of the escrows I have opened. Has it been easy, no. Have they fallen apart and then I salvaged them, yes.

Real estate transactions are not easy. They are not basic and they are not simple. I hope I have caused you to think about this "fall out" issue and you will take it very seriously. Your home and capital is at stake!