Most real estate agents want mortgage originators to close their home buyers’ mortgages in 30 days or less—50 percent faster than the national average closing time—according to a new national survey released today.
Real estate agents control or influence 45 percent of homebuyer decisions on lender choice, according to the “Home Purchase Mortgage Success Factors” survey, conducted in January and February 2013 by Campbell Surveys and Inside Mortgage Finance, and time of closings, lend reliability and costs are some of the most significant factors that lead real estate agents to recommend a lender for a home purchase transaction.
Two-thirds of the nearly 2,000 real estate agents that responded to the study mortgage closings in 30 days or less. Yet the survey found that the average closing takes longer than that. Ellie Mae reports average closing time for purchase mortgages in February was 47 days and the average for 2012 was 46 days.
“Real estate agents consistently tell us that the unpredictability of mortgage closing dates is a major problem, in addition to timelines longer than 30 days,” commented Thomas Popik, research director for Campbell Surveys. “Lenders like to blame appraisers for delays, but our survey results tell us that underwriters often cause delays, particularly when underwriters do piecemeal and last-minute requests for borrower documentation.”
According to agents, the three most common reasons that mortgage closings are missed or delayed are mortgage underwriting, appraisal issues and changes in underwriting policies. Real estate agents noted that uncertain closing dates are disruptive and costly for borrowers, regardless of time required to close.
Reliability and timing of mortgage closing dates are major points of frustration for agents and borrowers. “Our surveys consistently show that real estate agents recommend lenders that can consistently close on time,” Popik observed. “Agents are willing to recommend an in-house mortgage lender, but only if that lender enables a timely mortgage closing that results in an agent commission.” Insight from real estate agents will be key for lenders as the mortgage market shifts from a focus on refinances to an emphasis on purchase mortgages, he said.
Better reporting of mortgage closing status would significantly affect the willingness of real estate agents to recommend a particular lender. For example, 65 percent of agents would be more willing to recommend a lender if they were to be provided a mobile “app” to track the status of scheduled mortgage closings.
Closing costs also factor into lender recommendations from real estate agents, as more than half of the respondents reported that more attractive rates and closing costs would prompt a change in the recommended mortgage provider.