The $8000 tax credit is a nice perk for first-time homebuyers. In my opinion, new Buyers should look at it as a perk, not as an incentive, and especially not an incentive to buy a dump! Get back to basics, take a breath, and recognize the $8000 tax credit for what it is:
•1) Qualify for a home based on solid income, a certain level of confidence in job security, and ability to repay for years to come.
•2) Find a nice property that you don't have to sell for at least 5 years, better if you can keep it for 10 years or more, possibly as a rental later on.
•3) Don't let the pending deadline for free money lure you into a dump! First of all, market swings can wipe out that $8000 in a flash, even if you are buying a $150,000 property. Second of all, a dump doesn't need the market to help wipe out that $8000 of free money. A dump can do it all by itself.
If you're a first time home buyer, see my blog "Top 10 Ways to Know Your Buying A Dump."
In certain locations there is a shortage of inventory and a feeding frenzy among first-time Buyers trying to beat the clock. Meanwhile cash investors are snatching up the best properties causing first-timers to battle for scraps.
Yes, the $8000 tax credit is a nice perk. If you buy for all the right reasons, the credit is gravy. But buying a dog pile to get $8000 today and risk your future just makes no sense. Some times renting makes more sense. (OK now you can officially declare me the worst real estate salesperson ever.)
For all its encouragement and stimulus, the government doesn't even want you to buy a dump. Last I heard, they have not announced Cash-for-Clunkers Homes, and you don't want to be calling Marilyn Mock of the Foreclosure Angel Foundation in 2011.
Let the professional investors deal with risk. You too can be a pro some day if you make the right moves today. Also see Brian Brady's blog, Suspend the Practice Of Flesh Devouring: Let The First Time Home Buyer Tax Credit Expire