Construction workers continue work on a new subdivision of homes in San Marcos, Calif.
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As the days counted down to the credit expiration, Hutton says, she advised brokers to discuss with their clients whether it was more important to compete with other bidders for their No. 1 choice or to try to cut a quick deal on a second choice that might not be in as much demand. "Eight thousand dollars plays a big role in buyers' decision making," she says.
Walter Molony, spokesman for the National Association of Realtors, says that over the past several months, multiple bidding — which had been common in areas where lower-priced homes are in shorter supply, such as Southern California, Arizona, Nevada and Washington, D.C. — has spread to other locations, such as Pittsburgh, Pa., and Des Moines, Iowa, where lower-priced housing inventory is relatively high.
The tax credit, which through February had cost the U.S. Treasury more than $12 billion, appears to have helped kick-start the housing market by spurring many renters to make the leap. "Forty-four percent of sales right now are to first-time buyers," says Molony.
"In the first quarter I saw more first-time buyers in our community than ever before, with March being a great month," says Diann Patton, a broker at Coldwell Banker in Grass Valley, Calif. Though Patton did not experience a frenzied final week of sales, she noticed subtle changes in recent weeks, like a reluctance among her clients to participate in short sales. "This tells me buyers wanted to stay away from deals they knew might not be accepted in time to meet the contract deadline," she says.
Richard Dukas, owner and president of a public-relations agency in New York, put his three-bedroom colonial in Teaneck, N.J., on the market in the middle of April. Within 10 days, he had accepted an offer from a repeat home buyer keen to take advantage of the tax credit, and two days later they were in contract review. "I was stunned by how quickly this moved," says Dukas. However, the prospective buyer demanded a $6,500 reduction on the price of the house — equivalent to the tax credit — if the contract deadline was not met or if closing didn't occur before June 30. "We're still negotiating, and it will probably go down to the wire," he says.
Real estate agent Klein wonders whether the rush to sign contracts by April 30 will create a different kind of problem. Anyone can produce a signed contract, she says. But in many states, a contract has to be reviewed by the buyer's and seller's attorneys. It remains to be seen whether the government, when issuing the credit, will insist on seeing an attorney-approved document first.