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How does the government shutdown impact real estate?

The buck stops here!

The buck stops here!

If your home is currently on the market or you’re shopping for a home, you’re probably wondering about the government shutdown and how it will impact your plans. I certainly don’t have a crystal ball, but I can repeat what industry insiders are telling me.

The National Association of REALTORS published a white paper yesterday titled What a Goverment Shutdown Means for REALTORS, and I’m relying on that for the information that follows.  A link to the PDF file for this can be found at the bottom of this post, if you would like to download it and read the entire document.

Home Buyers: If you have a VA or FHA loan in process, you can expect some delays if the shutdown. I recommend contacting your agent and lender for their advice on substituting alternate financing or extending your contract closing date.  Hopefully all will be resolved quickly but that will require both sides to give and take in the ongoing political debate.

If you have a Conventional loan in process, you’re in luck because Fannie Mae and Freddie Mac will continue to operate normally.  This is because they don’t rely on appropriated funds.  Buyers using the Making Home Affordable program, including HAMP and HAFA, will not be affected, since those programs are funded through the Emergency Economic Stabilization Act and this spending is mandatory, not discretionary. HOWEVER, any delays in obtaining verifications from the IRS regarding your tax record or the HR Department of a government branch where you are employed could have a trickle down effect.

If you haven’t yet found a home, don’t stop looking.  Chances are that some people will do just that and you will have less competition for the best houses on the market.

Home Sellers: If your buyer has a VA or FHA loan in process, you can expect some delays.  If you’re buying another home, contingent on the closing for your current home, I recommend you contact your agent on the new home to make sure he or she is aware of this situation with your current home.  It may be appropriate for your buyer’s agent to notify the listing agent of the home you’re buying.

If the buyer for your home is using a Conventional, HAMP, or HAFA loan, cross your fingers… it looks like you’ll be okay.

However, if your home is not currently under contract, expect less buyer activity until this matter is resolved because VA and FHA buyers may wait until this matter is resolved to look at homes.  Even Conventional buyers may become disheartened, simply because no one likes uncertainty AND so many local and relocating buyers are government employees whose regular paycheck may be at risk. In fact, anyone working for a government contractor may also be facing some uncertainty about their next paycheck.

The bottom line:  September may be a tough month for anyone buying or selling a home and for anyone in the industry such as agents, lenders, contractors, home inspectors, and the like.  Let’s hope this matter is resolved quickly.

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I can’t help thinking that compromise is something we do every day in real estate.  We find something both parties agree on and go from there, no matter how tiny or insignificant, and then both parties compromise on their differences.  In the end, no one is 100% happy, but everybody gets enough of what they want to feel satisfied with the outcome.  We need to communicate to our elected officials that we expect them to do this.  After all, Congress and the President work for ALL the people, even those with whom they may disagree.  Just sayin’.

What a Goverment Shutdown Means for REALTORS

 

 

 

 

 

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