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New Survey ofReal Estate Agents Shows WASHINGTON, May 13, 2004 -- Mortgage-related issues negatively affect a sizable percentage of all home purchase closings, according to a new nationwide survey of real estate agents conducted by Campbell Communications. The survey indicated 12% home purchase transactions must be rescheduled due to mortgage issues, although they ultimately close, and a further 4% never make it to closing. The survey was conducted during April. Over 1,300 agents and individual brokers responded to the survey, resulting in an overall error margin of less than 3%. When asked about the specific issues that delay closings, 73% of respondents reported “Underwriting delays” as the No.1 issue. Other important factors were “Appraisal delays” at No. 2, “Homebuyer denied mortgage with initial lender” at No. 3, and “HUD-1 not available one day in advance of closing” at No. 4. When asked about issues that cause home purchase transactions to fail, the No. 1 reason, at 62% of respondents, was “Homebuyer denied mortgage.” However, “Seller unwilling to extend closing for mortgage delays” was also a significant reason, with 30% of respondents identifying it as a major issue. “ Behind these statistics are deep frustrations that real estate agents have with the mortgage process,” said Tom Popik, principal of Geosegment Systems and designer of the survey. “We know from comments that agents have given us, both in survey development and from the survey, that agents have long memories and big mouths when a mortgage provider causes a transaction to fail.” Another issue addressed by the survey is the increasing prevalence of invalid pre-approval letters, where applicant income or credit have not been sufficiently verified. According to responding agents and individual brokers, approximately 10% of all pre-approval letters turn out to be invalid. Not surprisingly, mortgage brokers cause the greatest pre-approval problems, with 46% of respondents declaring brokers the No. 1 offender. On the other end of the spectrum, respondents stated that “Mortgage affiliate of my firm” was the culprit only 3% of the time. “National lender with local representative” and “Local lender” were identified as causing pre-approval problems relatively infrequently, both being chosen by only 12% and 11% of respondents, respectively. “ One interesting aspect to this survey, and a distinguishing feature of all of our surveys, is the lender-specific responses we get,” said John Campbell, president of Campbell Communications, a marketing and research firm based in Washington, which conducts surveys in several industries. “ We asked agents which mortgage providers they recommend most often,” Campbell noted. “We found that local mortgage brokers were recommended only 33% of the time, while some estimates of overall mortgage broker share, including refinances, are over 60%. In contrast, large direct lenders such as Countrywide and Wells Fargo were well represented in real estate agent recommendations, consistent with the strong advantage that direct lenders have over mortgage brokers in the home purchase market.” The survey also asked, “Which mortgage provider would you least prefer to see on your real estate transactions?” Subprime lenders, Internet lenders, and national lenders with centralized call centers were top choices as mortgage providers objectionable to real estate agents and brokers. A follow-up question asked, “What are the significant reasons that you object to this mortgage provider?” Responses varied dramatically by lender, but on average, “Hard to get status of underwriting” was the No. 1 reason, with 61% of respondents, followed by “Misleads about expected closing date” and “Unreliable pre-approval letters” with 55% and 48% of responses, respectively. “ The survey results provide a roadmap for lenders directly competing in the home purchase market,” Campbell said. “With the lender-specific results, lenders can see where they are strong and where their competition is weak, and also where they need to improve. For example, we know which mortgage providers most frequently cause rescheduling because of underwriting delays. We also know which lenders’ pre-approval letters the listing agents would recommend that a seller not accept with an offer to buy a home. On the ranking of lenders with objectionable pre-approval letters, the first is an Internet lender, the second and third are national lenders with centralized call centers, and the fifth lender is a subprime.” Another area covered by the survey is the issue of unexpected closing costs, including the percent of time closing costs are significantly higher than the homebuyer expected at the time of application, the typical magnitude of unexpected closing costs, and the most significant causes of unexpected closing costs. In about 14% of all home purchase mortgage transactions, closing costs are significantly higher ($100 or more) than the homebuyer expected, according to survey respondents. When unexpected and significant closing costs arise, the average amount is slightly over $500, the survey found. The survey was sponsored by Inside Mortgage Finance, a weekly newsletter in the mortgage industry. A complete report with findings from the survey, entitled “How Real Estate Agents View Relationships with Lenders,” is expected to be available at the end of this month. For more information contact John Campbell at (202) 363-2069 or john@campbellsurveys.com. This article has been provided kind courtesy of Broker Agent News, one of the nations leading real estate news providers. To access their complete library of over 5,000 article visit www.BrokerAgentNews.com |
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