Real estate agents and first-time buyers are having problems sealing the deal.
Trulia reports that while the rate of failed sales are up across all home types, the share of failed starter-home deals (7.1 percent) is higher than failed trade-up (6.7 percent) and premium (3.8 percent) home listings, as of Q4 2016. A failed sale is defined as any properties that went from “Pending”, or “Active Contingent” back to “For Sale”, or “For Sale by Owner”. Nationally, the rate of failed sales increased to 4.3 percent from 1.4 percent from Q4 2014 to Q4 2016.
Trulia posits that first-time buyers are struggling closing deals because they are unfamiliar with the home buying process, and that they don’t have an extensive credit history from a previous home. Their finances are placed under a higher scrutiny. And, buyers seeking an FHA loan have restrictions on the types of homes they can buy.
Charleston, S.C., Fort Worth, Texas, Dallas, Atlanta, and Ventura County, Calif., had the highest rates of starter home sales fails, all above 13.7 percent. The percentage of failed starter home sales across the 100 biggest metros in 2016 was 6.3 percent, which was nearly three percentage points higher than in 2015.
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