Home Buyers Seeking Tax Credit Shoud Start Early

By
Real Estate Agent with Prudential Homesale Services Group

Recently a first-time home buyer asked me to recommend an optimal deadline for taking advantage of the extended tax credit.  Although April 30, 2010, the deadline for both first-time and repeat home buyers to have an executed sales contract in place, this gentleman's question was very timely.

Pausing for a moment, I responded that, if I were looking for the best home at the best price, I would begin taking measures to begin the process by mid-December. The logic behind my reply derives from the ever-changing mortgage funding guidelines and procedures which can be especially tricky for folks who have never purchased a home.  Additionally, in my experience, first-time home buyers typically tend to include family and friends in their home search and selection process. This takes time. If buyers take, on the average, 45 to 90 days to find the most desirable home at the best price, that could extend the time-frame to mid-February to late March. With settlements taking longer due to new legislation related to appraisals and Truth in Lending and Good Faith Estimate disclosures, buyers need to plan for 60 to 75 days from signing the contract to closing on their home.  What this means is that settlement would occur sometime in April or May.

Although the settlement deadline is June 30, there are several other good reasons for buyers to expedite the process. Interest rates may or may not remain as historically low levels.  Secondly, buyers, with the assistance of their REALTORS, need to assess the absorption rate of homes in the market at the time they are ready to place an offer.  No one can predict whether the protracted Buyer's Market will continue through the spring of 2010.  It's anyone's guess.  However, by starting the home buying process earlier, buyers can monitor and adjust the timing of their efforts according to the local real estate market which they are endeavoring to enter.  Finally, the knowledge that, on the average, 90% of purchase sales agreements actually reach the settlement table for a variety of reasons including information gleaned from home inspections,, cut appraisals, and "short sales," the savvy first-time home buyer will leave ample time to regroup and find another home in the event that the first purchase sales agreement is terminated or delayed.

 

 

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Roseann

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Rainmaker
706,456
Pat Champion
Coldwell Banker Camelot Realty - Mount Dora, FL
Call the "CHAMPION" for all your real estate needs

I'm with you the sooner the better for the First Time Home Buyer and repeat buyer's to start. Don't want to wait until the end and run out of time.

Nov 22, 2009 02:53 AM #1
Rainer
41,407
Suzy Morris
The Morris Team - Carlsbad, CA

Good post, Roeann.  We are experiencing multiple offers on lower-priced properties.  It may take a first-time buyer a few offers before one is accepted. 

Nov 22, 2009 03:08 AM #2
Rainer
478,183
Not a real person
San Diego, CA

Why would you wait until mid-December? What's wrong with now?

Happy Thanksgiving from our house to yours!

Nov 22, 2009 09:31 PM #4
Rainer
43,118
Roseann Annis
Prudential Homesale Services Group - Camp Hill, PA

Pat, Suzy, Philip, and Russel,

Thank you for leaving comments on my blog. We all agree that, as Philip stated, buyers need to develop a sense of urgency to be in the best strategic position to take advantage of the tax credits.

A note about multiple offers... Recently I experienced multiple offers on a listing priced below $200,000. In fact, my first-time buyer clients lost one home that way. The next competition to get their dream home involved paying $10K over asking price, which was intentionally set artificially low, forgoing inspections and an appraisal.  Luckily, the couple had private funding from family so could pay cash.  Although I did not recommend this course of action, the buyers really wanted the home so made the decision to proceed in that fashion.  My point in mentioning this is to affirm the need for buyers to start their home buying process as soon as possible.

Russel, I agree that buyers should start NOW to hedge any unexpected postponements. 

Thanks again, everyone.

Nov 24, 2009 12:34 PM #5
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