OK, so here is my new proposal to Uncle Sam, in an interest to keep the housing industry on the road to recovery let's provide an $8,000 Federal Housing Tax Credit to sellers!
Don't get me wrong, I wasn't thrilled about the idea of the Tax Stimulus when it was introduced. I mean, did we not learn for our past mistakes about lending money to people who cannot afford to buy a home? But since Uncle Sam has decided to intervene on the buyers behalf, I say in for a penny, in for a pound, or in American colloquialism, in for $8,000 dollars.
If the $8,000 was incentive to promote home sales and reduce "risk" then why are the buyers getting all the breaks? Let's remember that sellers too have taken a hit and a big one. The reduction in the home sale prices, the low interest rates and in some cases, a tax credit, have encouraged buyers. In our area, multiple contracts are common. And this is due to the fact that there are so few homes for sale! You would think this is all good for sellers, right? Wrong!
Appraisals are coming in ridiculously low, and appraisers are getting less accountable. Where buyers and sellers are finding a balance in the sales price, appraisals have made a train wreck of non bank and foreclosure deals. Lenders and appraisers are so removed from the healthy deals (and increased competition between buyers) that they do not see and weigh the recovering market. How are we going to bridge the gap between rising demand, low inventory and scared lenders?
In an effort to encourage recovery let's involve the sellers. Since the Fed has already decided to get involved, I propose we offer a $8,000 tax credit to sellers as an incentive to sell in this low market! Should an appraisal come in lower than the sales price then the "tax incentive" will encourage seller's to keep moving forward to settlement. Of course this idea has to have sales price cap (I apologize to the million dollar plus home sellers out there...)
A healthy market is based on balance and so far, this recovery package is one sided. In an atmosphere of shrinking inventory and plentiful buyers, let's encourage sellers and see what happens.