Construction workers continue work on a new subdivision of homes in San Marcos, Calif.
Attention all shoppers: Head to the realty aisle — fast!
At the stroke of midnight Friday, April 30, anyone hoping to cash in on the generous home-buyer tax credit will need a signed contract with a seller to qualify.
There's serious money at stake — up to $8,000 for first-time home buyers — prompting a mad dash among hopeful home shoppers to cut a deal, do a quick house inspection and sign a contract before time expires.
The current credit is effectively an extension of the original home-buyer tax credit that was enacted in February 2009. When the credit was extended last November, it was broadened to include a credit of up to $6,500 for repeat home buyers. For both groups, a legally binding signed contract must be in hand by the end of April, and the house purchase must be completed by the end of June, or else the credit is lost. (The new home, which must be the primary residence, cannot cost more than $800,000.)
This week, Department of Defense program analyst Toni Barr, a first-time home buyer in Rockaway, N.J., signed a contract one day after the seller agreed — after a two-month negotiation period — to her offer. Her real estate attorney "burned the midnight oil to make the contract deadline," she says.
Barr's real estate agent, Ellen Klein, who works at Century 21 Christel Realty in Rockaway, concedes she spent a "frenetic" week advising sellers to accept realistic bids. "I told them, 'If you pass on a first-time buyer this week, your offer on Monday will be at least $8,000 less than your asking price," she says, adding that many sellers took that advice to heart and decided to unload their property. Her daughter, a real estate attorney, has handled 10 contracts this week, Klein says.
Not surprisingly, for some, getting in under the wire has been an emotional whirlwind. "We've seen heightened excitement, anxiety and disappointment," says Tracy Hutton, a broker and president of Century 21 Scheetz in Indianapolis.
Hutton knows of some frustrated home shoppers who wanted the tax credit but could not make a quick purchase because they were unable to sell their own homes. She has also seen first-time buyers who have made an offer on a home only to find out that they were competing against multiple bids — quite a surprise in what is supposed to be a lackluster real estate market. "We've had buyers who lost a couple of houses because of these multiple-offer situations," she says. "Many of our prospective first-time buyers do have a less ideal backup house in mind, one that may not be inundated with competing bids."