So I was discussing with a client today when she should have a home picked out, negotiated and in escrow to ensure she gets the tax credit when I realized, we’re less than 3 weeks away from what I consider a safe bet, September 30th.
You may be thinking “wait, I thought November 30th was the deadline?”…It is, but in case you didn’t know you have to be closed on the transaction and have keys in hand by that date. Additionally lending / escrow usually takes about 30 days from the time that you make an offer, go through negotiations, inspections, lending requirements etc to close. Because of the expiration of the tax credit though we’re anticipating a last minute rush from first time home buyers and we’re seeing it starting now. What this means is it’s not just possible, but likely (and again, we’re seeing it already) that lending time frames are going to go from 30 days, to 45+ days and possibly even up to 60 days. So if you think you’re safe getting something in escrow by say October 25th; think again – the deadline would more than likely come and go while you’re in escrow and POOF, no tax credit.
What I see as a safe date is September 30th and the reason is that if lending time frames do increase significantly over the next few weeks being in escrow by September 30th would ensure you have a full 60 days to close…Now, obviously there’s a good chance you would close earlier than that, but there’s an equally good chance you may just barely close in time for the deadline too and wouldn’t you rather be closed with time to spare than find yourself having paid the $300-400 for an inspection and $400 for an appraisal just to find out that you are going to lose the $8,000 Uncle Sam would have given you?
Also, there is talk of extending the tax credit and speaking strictly in the realm of real estate (political views aside), we would like to see it extended; it’s moved homes for sure! BUT, we’re also hearing that since the economy seems to be recovering, slowly but surely, and the folks in Washington apparently have other things on their mind, they may not extend it; so this could be it.
Last but not least, for those looking to cash in on the tax credit short sales should be completely off the menu; period. With short sales frequently taking 2-3 (4, 5?) months to close, going after a short sale at this point would pretty much guarantee you miss the tax credit…Could someone get extremely lucky and still get one that closes in time? Sure, but I think the odds of that are about as good as winning the lottery.
In summary, if you’re not negotiated and in escrow by September 30th your risk of losing the tax credit begins to skyrocket. Additionally looking at short sales will pretty much guarantee missing the deadline.
~Scott McDonald; Your Portland Oregon Real Estate Agent
