Real Estate Information Archive

Thousands of pending home sales may be in jeopardy unless Congress extends the June 30 deadline for buyers to close on their deals and claim a tax credit.

The Senate on Wednesday approved a three-month extension, giving buyers until Sept. 30 to close, but it's attached to another bill that still has to be passed by the House.

The extension would apply only to buyers that met the April 30 deadline to have signed purchase contracts in hand.

The tax credit is worth up to $6,500 for repeat buyers and up to $8,000 for first-time buyers.

Many pending deals are in danger of not closing by June 30 because of delays that aren't the buyers' fault. Some appraisals are taking longer to complete, and some lenders have been overwhelmed by a crush of mortgage applications that landed before the tax credit expired April 30.

Up to 180,000 buyers who were hoping to close by June 30 and get the tax credit are likely to miss the deadline, according to the National Association of Realtors (NAR).

"We are hopeful," says Paul Bishop, vice president of research with NAR. "We've heard a lot of concern from Realtors out there. There seems to be a sense of fairness. The tax credit was essentially promised" to those buyers.

But some Realtors say even if a three-month extension is granted, that still won't be enough time for buyers pursuing houses through short sales, which can take many months to close.

"How are you going to close a short sale in two months?" says Edward Goldfarb, a Realtor with Keller Williams in Fort Lauderdale. "Hundreds of people are not going to close and are going to lose their tax credit. September is not any better. A short sale can take a year and a half."

Another concern is that buyers who face losing the tax credit could pull out of pending deals altogether. Any extension must be passed this week, or buyers will start canceling deals next week, before the deadline hits, says Richard Smith, president and CEO of Realogy, parent company of Century 21, ERA, Coldwell Banker and Sotheby's International Realty.

"We're concerned, as many people are, that this will force people to cancel their contracts," Smith says.

Brian Bonime, 33, has a contract on a home in Margate, Fla., but is worried the short sale won't close in time to get the $8,000 tax credit he was counting on.

"It'll put a dent in things financially," says Bonime, who works in management at a supermarket. The sellers "had brand new appliances they're taking with them, and we were going to get the money now so we can get appliances."

Homeowner Consequences

What BUYERS & SELLERS really want to know!
Send your questions to Marsha.Marsh@MarshaMarsh.com, and watch for our blog with the answers.

How do we try and avoid foreclosure?
The housing crisis is causing a mess, because of lower home values and massive foreclosures. Millions more of American homeowners are expected to fall into foreclosure during the next few years. In some cases, there may be no way to avoid foreclosure. Yet in many other cases, homeowners can avoid foreclosure by talking with their lenders and possibly taking advantage of new federal programs.

In this stage of the market, what are some tips for first time home buyers?
Buying a home can be a long, complicated and frightening process, and it is important to be prepared. Knowledge is power when it comes to negotiating the difficult world of home prices, interest rates and mortgage loans. For a first time home buyer, meet with one of our agents to gather as much information as possible, we’ll help you every step of the way.

What’s the best way to sell our home in a slow market?
Knowing how to prepare your home for sale, when to allow access for showings, and how you can offer buyer incentives will help you find the right buyer, even in a declining market. Marsha Marsh Real Estate Services can help customize the selling steps for your individual needs.

Is it true that financial institutions are becoming strict with appraisals?
The first issue has been the change to the FHA down payment requirement as of January 1, 2009. FHA purchase loans will now require a down payment of at least 3.5%. The other changes include updates to the FHA appraisal requirements, loans will now require two appraisals to be eligible for FHA. The costs of two appraisals may be an issue for borrowers, but the key issue is that the FHA is taking steps to limit its exposure to risky loans. In comparison to conventional mortgages, FHA loans still remain competitive as it often results in fewer pricing hits during a cash out transaction–meaning lower monthly mortgage payments for borrowers. Call Marsha Marsh Real Estate Services and we can arrange for you to meet with our mortgage specialist to find the best plan that will work best for you.

Should we start with a high sales price when we first list our home?
Because of the change in real estate market conditions, seller competition has increased. It is important to challenge a long-standing “myth”, that the initial listing price is not that important because it can always be adjusted down later. Contact Marsha Marsh Real Estate Services for a FREE seller consultation.

Source: www.realestateabc.com and www.fhaloanpros.com.