My Tax Credit Experiment

By
Real Estate Agent with Keller Williams Real Estate

The First Time Home Buyer Tax Credit may be a thing of the past, but just in case the opportunity miraculously reappears, here's a true story you may want to keep in mind:

Several months ago when Jane and Bill told me they are planning to relocate closer to Bill's workplace, we had "The Timing Conversation". In a market as challenging as ours, timing is no less important than price and condition, and when you add a Tax Credit deadline to the mix- time is truly of the essence. But Jane raised some concerns about putting the property on the market before moving out, referring to the impossible mission of keeping the house in pristine condition with 2 toddlers living on premises. It would be better to wait until the end of school year so "D day" was slated for 6/21. By then, Bill and Jane and the kids would have settled on their new house, moved out and maybe invested some money in touch ups, painting and appliance upgrades for the upcoming listing.

 But then came my Open House on 4/11 for another listing in the area. Not that I'm a big open house fan (we'll leave that hot topic for another post) but the weather was perfect, we just had a drastic price reduction and oh yeah, that Tax Credit was still around so I figured why not? It turned out to be quite a busy afternoon and it suddenly hit me how many ready and willing First Time Home Buyers came through that front door. With less than 3 weeks to credit deadline- Buyers were still out there, desperate to find something.  There's simply not enough inventory to catch up with the demand.

Armed with an epiphany and no real plan I called Jane and Bill as soon as the Open House was over. "This is going to sound a little crazy", I said, "but how would you feel about putting your house on the market slightly ahead of schedule..."  A long moment of silence followed and I quickly added "as in Tomorrow". "TOMORROW???"  I backed up a little to explain: "You see, there are Buyers out there that are doing everything they possibly can to take advantage of the $8000 tax credit. They are looking for your house at this very moment- but they can't find it. And this pool of super motivated Buyers will have shrunk drastically, if anything left of it at all, by 6/21". Then I went ahead to suggest my Nothing to Lose approach: let's get the house on the market, with the clutter, with the kids and with all the worries HGTV plants in Sellers heads when it comes to showing standards, and we can just try it until the end of April. "What's the worst that could happen? If this 2 week experiment fails, we're back to original plan." They agreed.

We were getting a decent amount of showings and on the sixth day on the market I did an Open House. I would never have imagined the house could hold that many people at the same time! There was this great energy, positive feedbacks- a real buzz in the air. That open house resulted in 2 competing offers and an over asking price winning bid. I don't know who was more amazed, the Sellers or myself. What started out as a spontaneous, long shot idea, ended up as a winning strategy!

Lesson for the future:  next time you have a beautiful artificial incentive like a tax credit, don't ignore it, and find a way to help it help you. It's an opportunity that may never come back!

Comments (48)

Erik Elsea
Erik Elsea-Jones & Co. Realty - Fort Myers, FL

This is an awesome example of how agents need to know their current market and conditions and help inform their customers with that knowledge.

May 27, 2010 06:30 AM
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

Congrats!!!  a few of my sellers recieved contract on the 2nd to last day of the tax credit- it al worked out wonderfully;)

May 27, 2010 06:36 AM
Wendy Rich-Soto, Realtor/Broker Associate
Keller Williams Realty, South Bay - San Pedro, CA
Getting you to your next with a zero failure rate!

Way to think outside of the box!!

May 27, 2010 06:44 AM
Anonymous
Kelvi Cunningham

I was also very suprised with the amount of buyers popping out of the wood work even the day before the tax credit expiration. I assumed early on that I would have captured my pool of buyers a few weeks before, but I assumed wrong and was working with new buyers into the wee hours of the morning on deadline day.

It was a good catch on your part to have your sellers take notice of that exact market reaction. I did the same with a new seller of mine on deadline week. I listed a good home at a good price and had it under contract the next day to a buyer trying to beat the deadline. Then, we actually found time for the sellers to get under contract and take advantage of the repeat buyer credit. It was fun to work both ends of the benefit. My closings for June are looking great because of this scenario! I'm glad you had a great experience with the tax credit also. Way to watch the market!

May 27, 2010 06:47 AM
#32
Kelvi Cunningham
ERA High Pointe Realty - Manhattan, KS

I was also very suprised with the amount of buyers popping out of the wood work even the day before the tax credit expiration. I assumed early on that I would have captured my pool of buyers a few weeks before, but I assumed wrong and was working with new buyers into the wee hours of the morning on deadline day.

It was a good catch on your part to have your sellers take notice of that exact market reaction. I did the same with a new seller of mine on deadline week. I listed a good home at a good price and had it under contract the next day to a buyer trying to beat the deadline. Then, we actually found time for the sellers to get under contract and take advantage of the repeat buyer credit. It was fun to work both ends of the benefit. My closings for June are looking great because of this scenario! I'm glad you had a great experience with the tax credit also. Way to watch the market!

May 27, 2010 06:52 AM
Cameron Novak
The Homefinding Center - Corona, CA
Featured Corona Real Estate Agent Team

Don't you love stories with happy endings.

May 27, 2010 07:04 AM
Ann Cordes
Century 21 Randall Morris and Associates, Waco - Waco, TX
Home Ownership is Not a Distant Dream

Odelia, besides that sale, I'll bet you get a couple od referrals out of it because your sellers will tell everyone how brilliant you are! Way to go.

May 27, 2010 07:34 AM
Duane Murphy
Expert Real Estate Partners LLC - Appleton, WI
Broker- Owner-Real Estate -

I loved the tax credit but I am glad to see it gone. It needed to die a straight death. Otherwise something like the tax credit loses it's effectiveness. I may welcome one back in the future but hopefully it won't be soon.

May 27, 2010 08:40 AM
Regina P. Brown
MBA Broker Consultants - Carlsbad, CA
M.B.A., Broker, Instructor

Odelia, that was a great strategy, to recognize the opportunity & seize it on behalf of your clients!  Great work.

May 27, 2010 08:41 AM
Vic Steele
Vic Steele, Broker CA BRE 01349863 - Anaheim Hills, CA
Broker/Consultant

You are dead-on Odella.  I have sellers that just listed, whom I tried to convince to list earlier, that are bemoaning the lack of showings even though they listed $50,000 below their original plan.

Fear kept them from listening to their professional. A lesson learned!

May 27, 2010 08:48 AM
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Great advice for listing agents. Now, here's my advice for buyers' agents.

Suggest to your clients that it may be smart to wait until such an artificial stimulus expires before they make an offer on a house. As you pointed out, Odelia, the panic on the part of potential buyers who visited your open house resulted in two competing offers and the house is selling for more than the asking price. Good for the sellers. Bad for the buyers. If the house is selling for more that it would have without the tax credit to stimulate panicky overbidding, then the benefit of the credit is reduced by the amount of the differential in the price of the house.

In other words, the tax credit stimulated some buyers to overpay for houses in order to receive a credit that is less than the overpayment.

Would the buyers of Odelia's clients' house have paid as much as they did without the credit? Did they buy a house or did they buy a tax credit?

May 27, 2010 09:09 AM
Vince McEveety
Gilleran Griffin Realty - Sherman Oaks, CA

I hope it never does... those were my tax dollars...

May 27, 2010 09:48 AM
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Hi Odelia -- Wow, exceptional advice.  Your clients are lucky to have you! :)

May 27, 2010 10:10 AM
John Elwell
CENTURY 21 Bill Nye Realty, Inc. - Zephyrhills, FL
You Deserve a Full-Time Agent, Not Reduced Results

I tell my home buyers that the low interest rates (today 4.78% says Freddie Mac) will make the tax credit look like small potatoes over the life of the loan. Or over the first few years for that matter. It is the gift that keeps on giving and you do not have to be a new home buyer or have lived in a home 5 years to get it. If you have good credit, BINGO! Tax credit = Good   Low Interest Loan = GREAT!

May 27, 2010 01:51 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

What a great way to take advantage of current events to help your client.

May 27, 2010 05:26 PM
Bernadine Hunter, SFR, ACRE
Keller Williams Greater Columbus Realty - Pickerington, OH
"Finding Solution to Your Real Estate Needs"

Great strategy that appears to be a win-win for everyone.

May 28, 2010 12:06 AM
Stephanie Stringer
First Choice Loan Services NMLS#210764 - San Antonio, TX
Mortgage Loan Originator

Great job on it all coming together.  It's called thinking outside the box.

May 28, 2010 02:13 AM
Scott Fogleman
New Home Team 804-573-9592 - Richmond, VA
Greater Good Group

What a great story! I am so glad it worked out for all parties and congrads on realiasing sometimes we need to change out minds and go with a gut feeling!

May 28, 2010 04:56 AM
Eric Michael
Remerica Integrity, Realtors®, Northville, MI - Livonia, MI
Metro Detroit Real Estate Professional 734.564.1519

Great job! This is the kind of pro-active thinking that I love to see.

May 28, 2010 10:19 AM
Sylvie Zolezzi
Decker Bullock Sotheby's International Realty - Greenbrae, CA

Odelia, Way to go!  There is nothing like the pressure of a deadline to get things done.  I had a similar situation with one of my listings.  I did an email blast to all realtors in SF Bay Area about my listing and how buyers could double dip and benefit from both the Federal Tax Credit and the California Tax Credit and got an offer on the last day of the tax credit.  We negotiated back and forth and opened escrow just before 5:00 pm, just in time...

Jun 17, 2010 06:55 AM