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Perils of the $8,000 Tax Credit

By Marney Kirk

Real Estate Agent with Cummings & Co. Realtors

October 22, 2009 10:42 AM

$8,000 The $8,000 tax credit has certainly been a great asset to my real estate business, as a few of my listings sold quickly to buyers hungry to get that back on next year's taxes.

What I am finding NOW though, is that is has the potential to hurt some buyers! I had a long & great conversation with one couple, who hopefully will wait for the right house and not act JUST BECAUSE of the credit.

They have lost out on 3 houses in Baltimore County they were interested in (luckily they weren't in LOVE with any of them!) because people really want this credit. Houses that have been on the market for MONTHS are selling now, with those settlement dates justbeforethecreditrunsout in November.

All of a sudden I was getting frantic emails about wanting to see houses that I KNEW from our buyer counseling session wouldn't work for them. And they wanted to see them NOW.

Why?

$8,000 in their pocket next year.

That is a very powerful thing, that $8,000. But wouldn't a $300,000 MISTAKE be worse?

We, as agents, need to be aware and advise our clients well as to whether waiting or moving forward is in their best interest. In some cases, it very well may NOT be, and we have to be able to counsel them to see and understand that fact!

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Syreeta Saunders

Keller Williams Realty Centre - Randallstown, MD

Keys, MBA - The Keys2Day Team

You have a GREAT point Marney. Thanks for posting this.

Oct 22, 2009 10:44 AM

Niki Fiala

Great Homes Realty - Clearwater, FL

Your Real Estate Consultant for Life

I totally agree.

I have had to tell buyers not to compromise on what they really want because of the tax credit. They will have to live with a possible bad choice for years to come.

Any word on a possible extention of the deadline?

Niki

Oct 22, 2009 10:49 AM

Anonymous

Carol Skees

I am seeing the same thing in the Albuquerque/Rio Rancho area. I got five calls last Sunday after 4PM of people who just had to look at a house so they could buy it and get the $8,000. Since they can borrow against this money for their downpayment - we are really just getting in to the ZERO DOWN mortgage programs again. They won't have anything in the house, so the first maintenance issue will make them doubt their decision to buy, and we will be looking at more short sales in the future.

Oct 22, 2009 10:50 AM

Sheldon Neal

Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ

That British Agent Bergen County NJ

Wise words Marney ! ... above all it has to be a sound investment for the long term ...

Oct 22, 2009 11:24 AM

Derek Massey

Mid-Atlantic Settlement Services - Hunt Valley, MD

Great advice. This is showing your long term value as an advisor and consultant rather than a short term salesperson. Well said, Marney!

Oct 22, 2009 01:02 PM

Jim Frimmer

HomeSmart Realty West - San Diego, CA

Realtor & CDPE, Mission Valley specialist

$8,000 would be a great incentive for me. If I were in the market, I could easily find a house that I would be satisfied with knowing that I'd get $8,000 back next year.

Oct 22, 2009 02:18 PM

Steve Shatsky

Dallas, TX

Hi Marney... What a GREAT perspective. People are sometimes motivated by factors that appear good, but could also work against them. It takes a professional to offer guidance that will help them make the right decision.

Oct 22, 2009 02:48 PM

Marney Kirk

Cummings & Co. Realtors - Towson, MD

Towson, Maryland Real Estate

Syreeta, thank you!

Niki, I know that NAR is fighting tooth & nail for the extension...and they are a very powerful association, but nothing has been decided yet!

Carol, I agree. Too many people are putting themselves out too much -- I think we will see another wave of shorts in a few years due to this as well!

Sheldon, thank you!

Derek, thank you! I do see my position as more of a long term consultant -- I'm there for them for life!

Jim, it is a great motivator -- unfortunately not the right one for some people!

Steve, thank you! I just want my clients to make the right decision for them -- and if taking that out of the equation does that, then that is the way to go!

Oct 23, 2009 12:09 AM

1~Judi Barrett

Integrity Real Estate Services 116 SE AVE N, Idabel, OK 74745 - Idabel, OK

BS Ed, Integrity Real Estate Services -IDABEL OK

You are so right on it! I have never understood the logic of going in debt beyond what someone should so that they can get a credit back or a refund in an amount that is almost insignificant in the big picture.

Oct 23, 2009 12:23 AM

Sharon Tara

Sharon Tara Transformations - Portsmouth, NH

Retired New Hampshire Home Stager

That amount, $8000 is a lot of money, but it is nothing compared to the cost of a home. I hope they find the right one or are willing to wait until they do.

Oct 23, 2009 04:16 AM

Kathy Clulow

Uxbridge, ON

Trusted For Experience - Respected For Results

Marney - in their rush to score the goal they may be tagged with a foul ... buying for the sake of the credit may be costly when the house really does not meet their needs, wants or desires.

Oct 24, 2009 01:27 AM

Marney Kirk

Cummings & Co. Realtors - Towson, MD

Towson, Maryland Real Estate

Judi -- I agree -- thank you!

Sharon -- it IS a lot of money, but yes, the cost of a home is much larger!!!

Kathy -- great way to put it -- tagged with a foul. Love the imagery!

Oct 24, 2009 09:44 AM

Jennifer Fivelsdal

JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY

Mid Hudson Valley real estate connection

Marney great points. If the focus is just on getting that $8000 credit this could really be a costly mistake.

Oct 25, 2009 11:32 AM

Marney Kirk

Cummings & Co. Realtors - Towson, MD

Towson, Maryland Real Estate

Thanks, Jennifer, that is the concern!!!

Oct 25, 2009 12:43 PM

Rebecca Gaujot, Realtor®

Lewisburg, WV

Lewisburg WV, the go to agent for all real estate

Marney, I also agree that this is sound advice and we need to ensure our clients understand the $8K credit..the good and bad points.

Oct 25, 2009 05:19 PM

Patricia Kennedy

RLAH@properties - Washington, DC

Home in the Capital

Marnie, this brings up a whole part of the tax credit thing that we haven't thought that much about. The whole idea that it could be both driving up prices and putting pressure on people to buy something they don't love is not a great thing for buyers. It'll be interesting to see how all this plays out.

Oct 26, 2009 01:00 AM

Barb Szabo, CRS

RE/MAX Above & Beyond - Cleveland, OH

E-pro Realtor, Cleveland Ohio Homes

Sound advice Marney. I have somewhat of an opposite situation. I have clients who made an offer on a short sale, knowing they will probably not meet the tax credit deadline and they are o.k. with that because it is the right home for them at the right price.

Nov 02, 2009 02:34 AM