HOW AN EXTENDED GOVERNMENT SHUTDOWN WILL AFFECT THE REAL ESTATE
BUSINESS
One may ask, how is this possible? The government shutdown
occurs when the Congress or the President fails to pass bills and appropriations
for funding government operations and agencies. This is what has happened in
the United States in the last two days. It's over now, and the government
workers are supposed to return to work as usual and continue to deliver to the
citizens. Many businesses would have been affected if the shutdown had
continued for a longer period. Real estate business is one of the sectors which
would have been largely affected.
Mortgage Approval
One of the effects of the shutdown is that mortgage approval
will be delayed until the government resumes normal operations. This, in turn,
will mean those in mortgage business and other home buyers who apply for
housing securities in government agencies (of which most are) will have to hold
their horses till then. The business will go down, and so will the sales.
The government shutdown will result in the delay of closings
while most transactions will be terminated as a result of this. In other cases,
home sellers will lose bids because their clients are no longer sure of the
fate of their business.
The shutdown will also lead to losses because home buyers
will reduce their offers due to the uncertainty. FHA or VA mortgage applicants
may also face delays if and when departmental workers will be sent home, and
there is no one to process their loan requests. Also, the delay could occur
when a lender needs to verify a Social Security number and there is no one to
answer the phone on the other end. The borrower may be delayed due to such.
The Internal Revenue Service will have a few workers in the
office. The workers will help to ensure that records are well maintained and
updated as required and that systems are working as usual to record payment of
taxes. Verifying information and processing mortgage requests is not essential,
so the workers will have to go home. This means no mortgages will go through,
thus affecting home buyers as well as home sellers.
Application for a mortgage requires clearance from the Internal
Revenue Service which documents and passes the information to the lender about
the borrower's financial capabilities. This service will come to a halt because
government offices won't be operational.
Businesses in St. Louis, Missouri will also be largely
affected. People who visit St. Louis for family outings and historical tours
will not be able to do so because most housing businesses will be shut down,
and government agencies for clearance and giving access will be closed.
The Visitor Center at the Arch and the Old Courthouse could
remain closed because they are government-sponsored agencies.
This means that buying a home at St. Louis will be hard and
may take a long time hence causing inconvenience to most of the clients. When
many government agencies stop their operations it is not one sector that is
affected since they are interconnected in a way. Actually when a few are
shutdown many more or all government agencies will be closed.
