DUC tracked by DMAR.
DUC is an acronym for Days Under Contract.
DUC up a few days since new lending laws enacted.
Homes sold in the Denver area have spent about 9 percent more days under contract before closing, since new mortgage rules went into effect about six months ago.
Sold homes spent an average of 41.6 days under contract from October through February, compared with 38.2 days during the same period a year before.
That information is known because for the first time, the Denver Metro Association of Realtors has tracked a new metric – Days Under Contract.
Days Under Contract, or DUC ,is a less tracked metric than Days on Market, or DOM.
But DMAR decided to track DUC to see the impact of the TILA-RESPA Integrated Disclosure Rule, better known as TRID, that went into effect last October.
The idea behind TRID is to simplify the mortgage closing for home buyers.
TRID allows borrowers to easily compare their loans with others when buying or refinancing a home.
The biggest change is the Closing Disclosure rule that requires th closing information, such as the Good Faith Estimate on costs, be delivered to consumers three days before they go to the settlement table.
That gives them time to ask any questions, address changes, or even back out of the deal.
The idea behind TRID is that consumers won’t be broadsided by any last-minute information as they are about the sign on the dotted line.
While many applauded, or at least didn’t criticize TRID, there was a wide-spread concern that it could delay closings.
“The idea was that as the title companies and lenders were ramping up, they wanted to prepare consumers for a 45-day closings,” said Anthony Rael, chairman of the DMAR Market Trends Committee.
“The thought was that 45 days would become the new normal for closings,” Rael said.
The data shows that while home are spending an extra three or four days under contract, TRID hasn’t greatly delayed closings, Rael said.
“Overall, I think (as far as time to get to the closing) TRID has been kind of a mixed-bag, but overall hasn’t had that big of an impact,” Rael said.
He said some of the extremely large banks, “the 900-pound gorillas,” seemed to be taking a bit longer to close because of TRID, while smaller, local mortgage companies that were more agile, didn’t have as many problems with all of the additional paperwork, he said. The flipside was that the the larger, dominant title companies, seemed to make a fairly seamless transition to TRID. Home closings typically take place in a title insurance company office.
“We thought this would be good and interesting information for our members,” Rael said.
“DUC is another metric for the Wild West market of ours,” Rael said.
“And as far as consumers, DUC is another talking point Realtors can have with their clients,” he said.
In January, the average DUC was 45, a 12.5 percent increase from 40 days in January 2015.
In February, the DUC fell to 42, a 7 percent drop from January, but a 10.5 percent increase from 38 days in February 2015.
In October, when TRID kicked off, the average DUC was unchanged at 38 from October 2015, but it did rise to 40 and 43 days, respectively, in November and December. Year-over-year, there was an 11.1 percent increase in the DUC in November and a 10.25 percent increase in December.
Closings always take a bit longer during the Christmas holiday months, for seasonal reasons.
“Not too many people want to close homes on Christmas Eve or New Year’s Day, although I did have two back-to-back closings on New Year’s Eve,” Rael said.
Given that the Denver-area market has a record-low supply, while demand remains strong, perhaps more important than DUC and TRID, is another change that Rael and other real estate brokers are increasingly noticing.
Post-closing occupancy dates stretched
“It seems in every closing the contract includes a post-closing occupancy date,” Rael said.
In a normal market, the person selling the homes, typically moved out within one or two days after the closing, he noted
“In today’s market, where a seller might have to either find another home to buy or has to wait to move into the home they bought, post-closing occupancy dates are extremely common,” he said.
Rael said that he has seen buyers allow sellers to stay in the home for 30 days or more after the sale was closed.
He said that is especially common for homes priced at $300,000 or less.
“I think when you start to get into the higher-end and luxury markets, it is less of a concern because they have a bit more supply and more homes to choose from,” he said.
Indeed, being flexible on the occupancy date has become a way for prospective buyers to distinguish themselves from others, when the seller receives multiple offers, he said.
“I’ve seen buyers get pretty aggressive with that and saying that they will let the seller stay in their homes, basically rent-free or only charge them a nominal amount,” until they can move into their next home, he said.
Meanwhile, DMAR will continue to track DUC, although the information will not be incorporated into DMAR’s monthly reports.
The information, however, will be available if a member requests it, Rael noted.
“We want to track at for at least another six months, so we will have three summers of data to look at and compare,” Rael said.
Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. DenverRealEstateWatch.com is sponsored by 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.