$8000 Tax Credit Running Out -- this effects SELLERS too!

By
Real Estate Agent with Cummings & Co. Realtors

I had a meeting last night with a great family who want to move to a bigger home. We first began speaking in May and I had walked through, giving them ideas on how to neutralize their home to make it more saleable.

Fast forward to last night, when we had originally planned to put it on the market, and it is not complete. They are so close, yet so far. it is looking SO good as they are SO close, but there are still things that need to be done before it can be put on the market.

So, what's the issue?

Well, they are in a VERY affordable neighborhood in Baltimore County, and homes in their particular subdivision don't sell too very often. It is definitely an area where a first time homebuyer would consider buying.

These sellers hadn't been thinking about the $8000 First Time Homebuyer Tax Credit, because they are not eligible. What they had forgotten is that a buyer for their house very well may be. We are finding in our marketplace that to be safe, buyers need 45 days to close, especially if an FHA loan. If sooner, great, and yes, it CAN be done. But you have to be prepared for possible issues.

The deadline for the tax credit is currently November 30. With Thanksgiving falling on the 26th, this cuts out the 26-29th essentially. Considering how many people are going to want to try to settle to receive this tax benefit, imagine how many closing are going to be scheduled for the 24th & 25th. And what if even ONE in a line of settlements has issues? How much could that effect YOUR closing?

So to be safe, buyers will want to schedule closings for Nov. 20th or sooner. Back out 45 days, and that is October 5. Which means a buyer needs to find a house and get a contract ratified in the next 27 days. If you, as a seller, aren't putting your house on until the week of September 28, you are hoping and praying that your best buyer hasn't already put a contract on something else and that they will write on your house in less than 8 days on the market.

That's a big risk!

Might the government extend the credit? Maybe. But are we going to bet on that?

I have another family in a similar position, and realize that they too haven't considered the implication of the tax credit on the SALE of THEIR current home. We have been focusing so much on reminding first time homebuyers to get moving, that we have not necessarily reminded our SELLERS that they need to get moving too.

Comments (10)

Joe and Molly Murphy
Coldwell Banker - Bradenton, FL
Put our Team to work for your Family

Thanks for the timeline,  time to get to work..  I would hate to be a title closer this thanksgiving.  I imagine there will be plenty of upset homebuyers who will not close in time.

Sep 09, 2009 01:15 AM
Marney Kirk
Cummings & Co. Realtors - Towson, MD
Towson, Maryland Real Estate

Hi Joe! That is the worry! I know one of my title guys has his team gearing up for that week, I think they are planning to hire extra temporary closers!

Sep 09, 2009 01:18 AM
Christine McInerney
Great Life RE - Knoxville, TN
The McInerney Team, Knoxville TN Homes For Sale

This is something that we have been telling our home sellers as well.  We have no idea what will happen when the this tax credit expires.  But we do know that right now it is a very good incentive for seller of homes that would match 1st time home buyer needs.

Sep 09, 2009 01:22 AM
Marney Kirk
Cummings & Co. Realtors - Towson, MD
Towson, Maryland Real Estate

Hi Christine & Jennifer, you are absolutely right! If it is not extended, I foresee that first time homebuyer market screeching to a halt November & December, if not into 2010!!!

Sep 09, 2009 01:25 AM
Sasha Miletic - Windsor Real Estate
RE/MAX Preferred Realty Ltd. - Windsor, ON

Hi Marney, Good post. THanks for sharing.

Best - Sash

Sep 09, 2009 01:47 AM
JL Boney, III
Coldwell Banker - Columbia, SC
Columbia, SC Real Estate

It will be very interesting to see how things pan out after the credit expires, looks like we will be seeing soon.

Sep 09, 2009 03:46 AM
Steve Shatsky
Dallas, TX

Hi Marney, with the tax credit deadline looming, it gives new meaning to the term "Time is of the essence!"

Sep 09, 2009 12:25 PM
Brian Griffis
Realty Choice - Springfield, MO

Wow, good point that time is running out.  I like that you mentioned you have to close before it runs out, many people don't mention that.

Sep 11, 2009 11:17 AM
Marney Kirk
Cummings & Co. Realtors - Towson, MD
Towson, Maryland Real Estate

Hi Sasha, thanks for stopping by.

JL, what are your thoughts? Do you think they will extend it?

Steve -- I know, it is great! Things are booming!

Brian, it is amazing that people really don't seem to realize that if there is an issue and you don't close before then, it means you don't get the credit!!!

Sep 12, 2009 11:24 AM
Annie Fahy
Mesquite, NV

Nice reminder about the $8000 tax credit expiring soon - Very motivational for agents to get busy.

Sep 28, 2009 10:59 AM

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