Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

10 responses to “Fewer Pending Sales Failed to Close in Q3”

  1. Erik

    “I think this indicates that while listings in a hot market might go pending very quickly, many deals fall apart as the buyers find out that they rushed into a less-than-ideal deal.”

    I would think that this indicates there are still a high number of short sales on the market.

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  2. ARDELL

    1) Fewer pending sales are failing since we started using “will look at offers on”. That is now a somewhat common instruction in many listings. People started rushing to tie up the property very quickly, while they decided if they wanted the house or not. It was becoming fairly common to get an over full price cash offer the day it was listed to tie up the property, only to have the buyer cancel after they saw the house. To prevent that from happening we started listing property on Wed or so with an instruction that seller will look at offers on Sunday or Monday night. That would also give some people time to do a pre-inspection, which cut down on the number of properties failing on inspection while pending.

    2) Prior to June 24th of 2008 we didn’t put a property as “Pending” until after the home inspection. We used an “active” status called STI (Subject To Inspection) instead of PI (Pending Inspection). Back then STI properties continued to appear on public sites along with active listings, but Pending sales would come off of the public sites. So you can’t go too far back when comparing failed “pendings”.

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  3. Kary L. Krismer

    RE: Erik @ 1 – That’s a good observation, although I would phrase it differently. At the time more buyers were willing to settle on short sales, and for some reason, banks started to approve fewer short sales. Judging by King County SFR, October was particularly bad for bank approvals. I think maybe banks may have gotten a bit too optimistic about the market, but whatever, a lot of short sales had to have fallen through, and at the current approval volume a lot more will have to fall out.

    Of course there are probably many reasons. I’d probably restate Tim’s position too as sellers accepting the highest offer rather than the best offer.

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  4. Erik

    RE: Kary L. Krismer @ 3
    Short sales can be pending for a year or longer. Not really sure why, but that is what I have observed. Since short sales go pending for so long, the delta between pending and closed would increase in magnitude.

    Looking at the graph, when short sales increased, so did the difference between closed and pending sales. As short sales began decreasing, the difference between closed and pending sales decreased. Tim is assigning the difference between closed and pending to people realizing they are getting a bad deal and bailing on the deal. Not sure why he decided to assign that reason, but that doesn’t seem like the reason to me.

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  5. softwarengineer

    Here’s Possibly Why Q3 Pending Sales’ Closures Down in Seattle Area

    “…A seasonal slowdown, higher interest rates and strict lending standards led to a small decline in pending sales of existing homes in August, according to the National Association of Realtors….”

    http://www.bizjournals.com/washington/breaking_ground/2013/09/pending-home-sales-down-in-august.html

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  6. Ira Sacharoff

    By Kary L. Krismer @ 3:

    RE: Erik @ 1 – That’s a good observation, although I would phrase it differently. At the time more buyers were willing to settle on short sales, and for some reason, banks started to approve fewer short sales. Judging by King County SFR, October was particularly bad for bank approvals. I think maybe banks may have gotten a bit too optimistic about the market, but whatever, a lot of short sales had to have fallen through, and at the current approval volume a lot more will have to fall out.

    Of course there are probably many reasons. I’d probably restate Tim’s position too as sellers accepting the highest offer rather than the best offer.

    You may be right. But why would sellers now, as opposed to months back, be accepting the highest, rather than best offer? Why were they accepting the best offer before?
    ‘Splain yourself, Counselor.

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  7. mike

    Virtually every house in my neighborhood over $400K that is in bad shape falls out of contract once sometimes twice before finally closing. It’s only the dirt cheap ones (extreme fixers and tear downs) and turn key homes that seem to close on the first accepted offer.

    As for the short sales, I’m puzzled as well. Most of them have been sitting empty for over a year before they finally close. That seems like a terrible deal for the bank since they get last years price and the house deteriorated even more in the meantime.

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  8. Kary L. Krismer

    By Ira Sacharoff @ 6:

    You may be right. But why would sellers now, as opposed to months back, be accepting the highest, rather than best offer? Why were they accepting the best offer before?
    ‘Splain yourself, Counselor.

    Isn’t it the other way around? They’re picking the best offer now (third quarter), compared to the first and second quarter (the earlier period I was talking about) because a smaller percentage of sales failed in the third quarter.

    Interesting how since 2009 the first and second quarter have been worse each year than the third and fourth. My multiple offer picking the highest offer explanation would only apply to 2013, not the four earlier years.

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  9. softwarengineer

    RE: mike @ 7

    What’s Worse Than Visible Things Needing Fixed in a Selling Unit

    Like paint and carpets….actually easy and fairly cheap to fix [hiring contractors too]…especially if the house is empty. If the house is full of junk collected over the years, like most are….painting and carpeting is horrifying, worse than moving….”you” have to move and stage one part of the house into another and repeat this process several times. Its been weeks since I fixed my house and I’m still putiing stuff away….thank God I junk trucked away 3/4s of the household goods [they separate it for the Goodwill] before I attempetd it, it was still HORRIFYING work, minus the actual painting and carpeting.

    The perfect looking homes may have [and most likely probably do have] cracks in the glueboard baseboard covered up with new flooring and/or carpets or wood flooring installed without water-proofing the cheap glueboard floor base before installation. My carpet contractrors were very angry with me for demanding oil base paint water proofing on the baseboard before carpet installation…..the toxic fumes for an extra $250 was not worth it to them; but it not only prevents future baseboard deterioration from spills, it seals out the old mildew and/or HORRIFYING dog smells that new carpets can’t hide. My house smells like brand new now, even if it really didn’t smell bad to you [you're used to it]….no wonder they burn incense during home shows.

    Its like ALL cars with 100+K miles on ‘em, the door and trunk rubber seals start to leak after like 7-10 years and the car develops its own odor after that happens…..no wonder they sell tree shaped car deoderizers by the handful at the auto parts stores. Of course that rig with 100+K milage on the paint may not look too oxidized “yet”; but its sheen from 80K miles ago is visually deteriorated and IMO subpar. I trade ‘em all in before these quality defects occur.

    Why are old immuculant looking houses any different?

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  10. One in Five Pending Sales Failed to Close in Q4 • Seattle Bubble

    […] the gap between pending sales and closed sales had been shrinking in the second and third quarter, it opened up a bit in the fourth quarter, inching back up to just under 20 […]

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