In 2008 the home buyers’ tax credit was established to help a slumping real estate market. When it was slated to end November 30th, 2009, Congress extended the credit until April 30th. As the market has begun to rise again (such as it did in November), buyers from all over the country are cashing in on the credit. Up to $8,000 is available for first time home buyers and $6,500 for repeat buyers.
So what does this mean for buyers? Get shopping.
Americans have procrastinated historically when it comes to tax credits and this one is no exception. Buyers can expect to compete in a hot market all throughout April, although it is uncertain whether this trend will continue into the summer. Strong offers will have to be made if anyone wants to take advantage of the credit and avoiding any type of procrastination is key. Real Estate Agent Ryan Asao had these tips for buyers trying to make a last minute push:
Work with an agent who has a large network and knows a lot of people
When it comes to making deals at the last minute you need someone in the know. Working with an agent who has a large Rolodex is absolutely critical in today’s home buying process. Listing agents for the most part are sticking to working with the agents they know. Buyer’s Agents have 30 seconds to make an impression with a Listing Agent over the phone. Why chance that impressions with a lesser known Realtor? The bottom line is “agents” like working with “agents” they know.
Work with an agent who is a strong negotiator
Even if your Realtor already has a relationship established with the Listing Agent, they need to be able to push your offer to the front of the list. Whether it’s on the phone or in person, you need to first of all decide if your Reatlor makes you comfortable during the process. If you can’t be confident in your Realtor then you probably can’t be confident in your offer. Even if you think your offer is a strong one, at the end of the day its your Realtor leaving the final impression on the listing agent and the seller.
Realistically expect to put in your last offers a week before the end of the month
As the offers pile in for a property, life gets hectic for all the parties involved. It is pretty unrealistic to expect to be able to write an offer and have it accepted by the 30th. Listing Agents will already be coping with the deals they currently have on the table knowing fully if they don’t sign by the 30th, they’ll lose most of their offers. April is going to be cutthroat so offers need to be sent early. The longer you wait, the less time there is for any negotiations and/or additional pushes for the listing.
So who is eligible and what are incentives?
Qualifications for $8,000 tax credit:
- Must open escrow before April 30, 2010 and close before June 30, 2010.
- Must be a first-time home buyer, which means you cannot have owned a home — and used it as your primary residence — for the past three years prior to purchase.
- Home you purchase must be used as a primary residence. The home cannot be used as a vacation home or rental property.
- Cannot purchase a home from a close relative such as your spouse, parent, grandparent, child or grandchild.
- Must make less than $125,000 for a single taxpayer or less than $225,000, if filing jointly.
About the $8,000 tax credit:
- Use as downpayment or closing costs — Initially, the tax credit was designed as a refundable credit on buyers’ tax return next year — either up to $8,000 or 10% — whichever came first. Now, a new HUD initiative allows qualifying first-time home buyers to receive these funds upfront to be used as a down payment or money towards closing, as announced by U.S. Housing and Urban Development Secretary Shaun Donovan. This has been referred to as a bridge loan.
- FHA-approved lenders, only — At this time, only the Federal Housing Administration (FHA) has issued guidance regarding the monetization of the first-time home buyer tax credit. Home buyers using FHA-approved lenders can apply the tax credit to their down payment.
- Home buyers must pay the 3.5 percent — While the $8,000 tax credit can be used for the down payment or closing costs, home buyers must still come up with FHA’s required 3.5% down payment on their own.
So for all you buyers out there, get off the computer and start writing offers! If you haven’t found Realtor you feel is capable of handling your offer in this market give Ryan a call at (626) 253-4557. Good luck