So your thinking you need to purchase a home in the next seven weeks because you might not have a chance to collect on the $8,000 tax credit coming to an end in November.  Personally I think you should take another look at the market and affordability.  Many real estatee professionals will not like me to share this line of thinking with you because they like when the market has bonuses that invoke a sense of desperation like a tax credit coming to an end.  Fact is there are around 450-500,000 foreclosed properties that still have not come to the market.  Why is this important?  Follow with me.

1) Currently there is a lack of desirable properties on the market and buyers are struggling to find homes that work for them, but they are still buying because they are panicked that the tax credit is about to expire.  I have seen 6-10 offers on most of my foreclosure listings and the last property I closed sold for $45,000 more than the bank listed it for.  WOW!  Over the last 6 months I am averaging offers around 5% over list price.

2) Due to the RUSH on the remaining properties, there is a small increase of 2-5% in home pricing depending on where you are searching.  This will be temporary until the tax credit expires.  New home starts are already reflecting this in the number of permits being pulled.  Expect pricing to drop when the tax credit is over and due to seasonal price reductions based on the weather related market and the Holidays.  Winter is always slow and therefore less demand creates lower prices on a temporary basis. (Dec.- Mid Feb.)

So what does this mean to the average home buyer.  It's simple.  Wait 3-4 months and save more money than the tax credit will save you and possibly find a nicer home than what is currently available in the market today.  How you ask.

Say prices are temporarily inflated by 3% and you are seeing offers per my own listing experience of 5% over list price.  Say that after the tax credit prices drop another 3% due to a rise in inventory and the upcoming seasonal slump real estate sees and you are no longer forced to compete with multiple offers or pay above list price for a property?

Here is how you save much more than the tax credit affords you.

The banks release the estimated 450-500,000 foreclosures expected to come to market this year.  The tax credit expires, the market has a seasonal adjustment and the number of competing buyers drops.

The effect could be like this. Your currently looking at listings around $175,000.  You've lost out on one or two homes to higher offers due to the current crunch.  Your finding these homes are selling for 4-5% above list price or (5%= $183,750).  Your willing to pay because you will save $8,000 due to the tax credit.

But what if you waited?  Say a similar listing comes to market after the tax credit has expired.  Due to natural pricing by REO or foreclosure specialists, the same listing that would have been $175,000 drops to $169,750 (3% Reduction) because they understand their will be fewer buyers and the banks still need to sell these properties.  Say because the market has changed and you no longer need to compete against other buyers, imagine the bank accepting an offer 3% below the listing price. ($164,657.)

Tax credit?  Who needs a stinking tax credit?  What would have possibly cost you $183,750 may only cost you $164,657. and it may be a home in better condition or in a more desirable neighborhood or school district?  That's a savings of $19,093!!  This is a very likely scenario based a market conditions and the upcoming seasonal market.  Which would you rather have?  A $8,000 tax credit or the same or better house at a $19,000 savings.  The savings is also bigger than listed due to the fact you would be paying less interest on the loan.  So in closing, don't panic but due plan on acting in the next 4-6 months.

The Helmers Group believes in giving you information to make sound decisions and will alway look out for your best interests.  Call or e-mail us today to get the information and help you need in this market.

Here is a link to a story on the impending increase in foreclosures coming to market. http://rismedia.com/2009-10-04/where-are-all-the-reos/