Tax credits expire in three weeks

Last October and November there was quite a groundswell of opinion encouraging the government to extend the first-time homebuyer tax credit past its Nov. 30, 2009 deadline. In early November 2009, they not only extended the deadline for the tax credit.  They also made a tax credit up to $6500 availabe for some repeat homebuyers.  This time as we approach the new deadline (April 30, 2010 to be under contract) politicians are NOT lining up to support an extension.  So as it looks now, the tax credit will be history in a few short weeks.

Realistically, for some transactions the deadline has already passed.

• For new construction the equally important deadline is to be closed by the end of June.  So if you are wanting to build, it is essentially too late to build and meet the deadline.  (Maybe they could complete a small ranch home in 2.5 months but even that's stretching it.)
• Builder spec homes (inventory homes) would be one way to get a new home and still be within the deadline.  If there is an already-complete or nearly complete home in the builder's inventory, that would be possible.  But please act now.  There are probably several other people looking over builder-owned homes with an eye on the tax credit deadline.
• For short sales, it would be hard for many of the players to get their act together and get the sale approved by all parties in a few weeks.  Unless the short sale is under FHA's Pre-Foreclosure Sale program where a quick response is legally required, a short sale is too risky.  The Home Affordability Foreclosure Alternatives program (HAFA) also provides for quicker response, but the program is just too new to have a track record.
• For HUD Homes you need a contract signed by both parties.  When you send in the bid documents, there could still be a delay in getting a signature from HUD's representative.  I would say that paperwork needs to be assembled carefully and get to HUD's representative at least ten days ahead of the deadline.  Be prepared to make a quick response to any requests for additional information when the contract documents are reviewed.
• For traditional transactions of existing homes, you might be able to go closer to the deadline, but please allow plenty of time.  If inspections kill a deal after April 30th, that would remove the buyer from being able to qualify for the credit.  So even though you might be able to squeak by with a signed contract before the end of the month, it is in most buyers' best interests to be under contract as soon as possible.  (Recent 30 year interest rates have gone above 5% - another reason not to dawdle.)

After the deadline has passed, life will continue.  People will continue to buy and sell homes.  But the numbers of buyers will probably drop off quite a bit.  Some say that with the expected drop in demand, that prices might fall.  In some price points, homes might even fall by an amount greater than the tax credit.  If you ready to buy, now is a great time.  But if it doesn't work out now, a good agent should be able to help you find a good home at a favorable price over the coming months.

If you are looking for a new home in the Indianapolis area, contact me or visit my website.  Yes, we do keep track of ready-now new homes that might help you get a large check from the government. And we can also help you with HUD Homes.   Of course, you should consult with your tax advisor to make sure that the tax credit is a match for your specific situation.