Tick, tock….tick…tock… The anticipation of first time home buyers around the nation is coming to an end. These are the last days of the tax credit in Houston. It’s funny how buyers who procrastinated so long are now coming to terms or making offers like crazy. These were the same buyers who were submitting low-ball offers these past few months thinking that this buyer advantage would go on forever. The great news is that Houston has benefited from a more stable real estate economy than other parts of the country. The unfortunate truth is that as we wrap up the end of the tax credit we are seeing skewed numbers. It seems buyers have been over paying lately. I’ve had several buyers who have submitted offers at asking price and the property goes into contract for a higher price.
The tax credit was established by the administration to assist buyers in purchasing their first (primary) home. It also considered buyers who hadn’t owned in the last three years “qualified” to take advantage of the credit. This credit was extended and expanded from its 2009 predecessor to include recent homebuyers. What’s the catch? You have to be in contract by April 30, 2010 and close by the end of June 2010.
1. Will it be extended again?
Probably not. So far Friday’s deadline remains. There has been much lobbying in Washington for an extension but no signs of one as of yet.
2. Can I still qualify!
Please consider that you can still qualify (only a few days left) but other buyers such as yourself are going to possibly get into a bidding war with you.
3. Don’t Overpay!
Ok, so you waited last minute and now you want to qualify for the tax credit. Before you go sending your best and final offer, consider HOW MUCH you are paying. If you are paying $8000 more than you normally would then you are probably at a draw. It is always best to compare homes for sale in Houston and get comparables to make sure the house will appraise for the asking price.
4. Beware of short sales and foreclosures!
Short sales and foreclosures in Houston usually require an asset manager or the bank’s approval which can take several days up to several weeks for an offer acceptance. You probably won’t qualify if the bank hasn’t already seen your offer or doesn’t expedite responses. Short sales can take several months to close (3-4 months on average in Houston) so you may not qualify for the closing deadline of June.
5. What is tax deductible if I don’t qualify?
You can still deduct your mortgage interest from your home purchase as well as any PMI that is paid. This of course will apply to your next year’s tax returns if you purchase this year.
If we do see an extension to the tax credit, please don’t wait until the last minute! You will only be competing with other panicked buyers and sometimes even overpay for something you could have gotten a better deal before.
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Sincerely,
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Keller Williams Houston Metropolitan
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Original Posted 4/27/10: Houston Real Estate Blog
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