As the federal homebuyer tax credit expires across the country at midnight, the response from homebuyers has been mixed. Some brokerages are scrambling to help their buyers beat the deadline, but in many cases, there were few last-minute deals being put into contract today, said brokers and agents reached by Inman News.
"Most buyers wanted to avoid the squeeze of a last-minute house hunt and added pressure of negotiations, and thus planned and acted ahead," said Steve Wiley, owner of Smarter Choice Real Estate, in Lincoln, Neb.
Wiley said his pending sales in March and April were up 30 percent over the same time last year. His gross sales revenue saw a somewhat smaller increase, about 20 percent, he said.
"Both are due mostly to first-time buyers — more deals, but fewer dollars compared to the average sale," Wiley said.
The federal homebuyer tax credit — up to $8,000 for first-time homebuyers and up to $6,500 for repeat buyers — requires that buyers have signed a binding contract by the end of today. Transactions must close by June 30.
Real estate professionals say the tax credit has helped spur sales, but that the tax credit was more of a bonus to those interested in buying right now, than a primary incentive. Buyers’ personal situations and finding the best house for them trumped the financial incentive of the credit.
"(The) credit helped push buyers who were on (the) edge. (The) credit plus (low) housing prices made it a no-brainer if you were in a position to buy a home and have already been working with (an) agent and getting (a) downpayment together," said Sherwin Sucaldito, an @properties agent in Chicago.
He recently had two buyers who took advantage of the credit and are under contract, and he also had four who missed the deadline but are not worried, he said.
"The tax credit really didn’t do much for those not really considering to buy. Like renters or previous owners, especially those who bought at (the) peak — (the) credit wasn’t large enough to make a strong case and make up for lost home values," he said.
Laffey Associates in Long Island had 60 deals in the past two days because of the tax credit, said Jeff Stone, a sales associate in Greenvale, N.Y. Laffey has more than 400 agents.
"However, this was not the case for me. I had one deal die because the buyer felt pressured and backed out. Other buyers told me that getting their ‘dream house’ was more important than the tax credit offered. In my opinion, this tax credit was a mixed blessing," Stone said. …CONTINUED
In the last couple of weeks, Joe Peffer at Delicious Real Estate in Columbus, Ohio, had three clients who were very interested in buying, mainly because of the homebuyer tax credit. Peffer told them, "It is a fantastic and possibly once-in-a-lifetime opportunity but not a good reason to purchase a home in and of itself. Either it’s the right time (or) not the right time. If it is the right time, financially speaking, it’d be smart to beat the deadline but dumb to settle on something you don’t love."
All three of the buyers were prepared to let the deadline go by because they hadn’t yet found the best home for them, he said. But just this week the prospective buyers did find homes that they desired, and sellers accepted each of their offers, he added.
"The seller no doubt understood that his single best opportunity of selling this particular home was selling it this week to someone just like my buyer," said Peffer of one of the deals.
In California, some buyers are trying to take advantage of both the federal and state homebuyer tax credits. The California tax credit — up to $10,000 for qualified buyers — applies to residences that close after May 1 and before Dec. 30. So, some clients signed contracts in the past couple of weeks, but are holding their closing until May 1 or later.
"It’s absolutely a great deal. So now I have these clients who are going into contract. If they’re signing the loan docs today they’ll close early next week. I have five clients who are all first-time homebuyers who are holding their closing," said Stewart Davis of Princeton Capital, in-house mortgage originator for Coldwell Banker in the Oakland, Calif., neighborhood of Montclair.
While Realtors are generally glad for the boost in business, many say low interest rates helped as much as the tax credit, and don’t anticipate a big drop-off in sales.
"Now, as Realtors, we can finally get down to business — selling homes that are at great prices along with very low mortgage rates. Less stress and anxiety on both sides will lead to a better selling process," Stone said.
For those trying to get homes under contract by the end of the day, Inman News contributor Frank Llosa gives some last-minute tips to get a deal done, including submitting backup offers and preparing an offer for your seller to suggest to a buyer.
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