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Attention! The $8,000 Tax Credit May Expire Faster Than You Can Buy!

By
Real Estate Agent with Berkshire Hathaway HomeServices California Properties DRE# 01788371

You May Already be Too Late!

By now, you have probably heard about the $8,000 Tax Credit for First Time Home Buyers, and that it expires on November 30, 2009.  OK, you think, we have plenty of time to wait until the end of the year to buy our home and still get the tax credit.

Not so fast, my First Time Home Buyer Friends. 

Before you know it, you may be faced with the year running out of time.

Here's the timeline catch for the tax credit:  Buying the home before November 30 does not mean making an offer on a house.  It means you must close Escrow no later than November 30, 2009.

If you need to close escrow by November 30, when do you need to start looking for a home?  Let's count backwards to arrive at your deadline.

The first consideration is how long your escrow will take.  Let's assume that you will not be making an all-cash offer, and you will need to finance the purchase with a home loan (mortgage).  A good, quick escrow can take as little as 30 days; however, many escrows can take 60 days or more.  If you are thinking about buying a short sale property, forget about it.  Short sales can take 3 - 4 months before the lender even accepts your offer, then another 2 or 3 months to close escrow.

For the sake of this timeline, let's use a 60 day escrow period for a regular or bank owned property, which means that you must open escrow 60 days before November 30.  You must open escrow no later than September 30.

Now you need to consider how much time it will take for you to find the home you want to buy.  A very quick buyer can find a home within a couple of weeks, if they are looking in a price range and area that have lots of housing inventory and little competition.  For example, someone looking to buy a home in Friendly Hills, at a price above $1,000,000 should be able to find a property in that time frame that they want to buy.  However, someone who is looking to buy a home for less than $400,000 is facing stiff competition from other home buyers.  They may take a couple of weeks to find a home they like, only to find out that it has already sold by the time they make up their minds.  Or, they may make an offer on a nice home and later find out there were 30 offers on the home that they loved.  Inventory is very low for homes under $400,000.  Expect to take 2 - 3 months to find a property and get an offer accepted.  To be safe, plan on three months of searching and making offers, which means that you had better start your search no later than June 30, if you really want to close escrow by November 30, and be eligible for the $8,000 Tax Credit.

-Blog End-

 

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About the author: The above Article about the $8,000 Tax Credit Deadline was provided by Rob Willis, a Whittier Realtor®.

For Whittier real estate, see this website.

Thinking about selling your home? Go to The Home Sale Site.

I service the following towns in the greater Whittier area: La Habra, La Habra Heights, La Mirada, Norwalk and Santa Fe Springs.

Comments (3)

Tom Boos
Sine & Monaghan Realtors, Real Living - Grosse Pointe Farms, MI
Providing the very best of service to Sellers and

You are absolutely right.  I have been telling my Buyers to "get busy" and zero-in on a property quickly, especially if it is "subject to short sale".  We could easily be looking at a four-month delay from PA acceptance of Seller and final acceptance of Seller's Mortgagors.  Thnaks for the alert.

Jun 17, 2009 07:06 AM
Bob Willis
Berkshire Hathaway HomeServices California Properties - Orange, CA
Orange County & L.A. County Real Estate Agent

Tom:  You're right also about the short sales delay from seller acceptance to mortgagor acceptance.

Jun 17, 2009 07:33 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Bob - You are so right!  These programs were rolled out quite quickly to stimulate the economy.  They can go away equally fast.

Jun 19, 2009 02:05 PM