In the wake of today’s government shutdown, many people currently involved in real estate transactions are wondering where it leaves them. Here are a few ways the shutdown can (and will) affect the real estate market for both buyers and sellers:
1. Loan Approval Delays
For potential buyers who are seeking a government-backed loan (e.g. FHA, USDA or VA), be ready to expect delays in the loan approval process. Many of these agencies are staffed with employees who are now on furlough and approvals will most likely be at a complete standstill until the furlough is over.
2. Contract Processing Delays
Buyers already approved for a government-backed loan can still expect significant delays. Although some aspects of the FHA, USDA and VA systems are automated (which will help), there are still many instances when the process will require a physical employee to complete processing.
Both buyers and sellers should be aware that for nearly every loan (to include conventional loans), underwriters will require the IRS form 4506T. Because many IRS workers are furloughed by the shutdown, this will have massive delays in the approval process. This is not an automated system, so this will cause the biggest problem if the shutdown lasts for an extended period of time.
3. The Housing Market
For people interested in (or in need of) selling their home, the biggest concern is how the market will fair under this shutdown. If the shutdown lasts a short period of time, there will be relatively little impact on the overall market. However, a long-term shutdown could affect the market significantly thanks to the multiple delays in contract and loan processing mentioned above.
So, what’s the bottom line?
The best course of action buyers and sellers can take is:
- Get Informed – If you’re wanting or needing to sell your home, talk with a Realtor to see what your options are. Ask them for insight and information on how the market is being affected by the shutdown. If you’re a buyer looking to get a loan, contact a mortgage lender and ask them for a realistic timeline on approvals. Buyers who already have loans should speak with their lender as well. Find out if there is anything you need to do to make the process easier (e.g. forms, extensions, etc. that you can work on and have ready).
- Be Prepared – Buyers and sellers currently holding contracts should be prepared to work together with the other parties, and be understanding of the realistic delays due to the state of the government. More than likely, signing contract extensions will be the norm until the shutdown is resolved.
- Be Patient – As frustrating as it may be, patience is going to be the key in making it through this shutdown. Remember that you are not alone – there are others who have been put in a similar bind as far as closing goes. Although it may seem as though the shutdown will last forever; it won’t.
If you or someone you know needs information, guidance or even reassurance regarding the affects of the government shutdown on the real estate market, contact the knowledgeable staff of Team George Weeks with RE/MAX Choice Properties!