Quotes of the Day

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."

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.

• Coeli Carr
• In the final hours for the homebuyers' tax credit, real estate agents, buyers and sellers are in a frenzy to cut deals