Comments on: $15000 For Homebuyers From Federal Government Coming Soon?

By: Mike Giraldi

Mike Giraldi — Mon, 09 Feb 2009 21:53:02 +0000

This is very true. I have buyers that are closing on Wednesday. They have already informed me if this bill doesn’t pass they would like to postpone their closing until it does. This is opening up another can of worms and Congress needs to stop screwing around and get this deal done!

By: Tom Royce

Tom Royce — Mon, 09 Feb 2009 14:10:36 +0000

Jason

Great points. The only thing I see is that the $7,500 tax credit is a 15 year no interest loan, while the $15,000 is a full tax credit.

Otherwise, my biggest concern is that this has to pass the Senate and make it through the conference committee. Congress has the ability to change things during this process. While the bill may not create a huge change in a high dollar city, this is a 10% rebate for a 150,000 home. That is huge for large parts of the country and worth waiting for.

Since most of the country is not upside down and just waiting for a market to stabilize it it makes sense to wait till the stimulus is passed and there is law to work off of.

That is where I came up with my rational.

By: Jason

Jason — Mon, 09 Feb 2009 13:58:34 +0000

Tom, Love the blog. I don’t necessarily agree with your stance that the $15,000 would postpone people closing on a home. Whether or not it passes I believe that currently there is a $7,500 credit already written in. Feel free to correct me if I am wrong as I am not an accountant or tax adviser. Secondly, if it does pass it would be retroactive at least to the first of the year. SO, if someone is already planning on buying, unless the difference will make or break the transaction, meaning they are relying on the other $7,500 to offset what they would have spent over the year on the mortgage or as a tax write off, I would assume that the sales would typically go through. I personally think you will see alot more inquiries as this information gets out and a realtors job- stimulus or not, is to help these people find the home they are interested in, or on the other side, make a home for sale as attractive as possible so the buyer can’t say no.
-
Aside from the tax credit- the bigger issue will be, who is left to buy a home? Many Americans are completely upside down in their home, and if not, either have other debts, lost a job, or have no way of coming up with the now 20% down that lenders are requiring these days. This tax credit does not look like it will help those Americans who really need it. Hopefully there are other provisions in the stimulus package that will keep homeowners in their houses, and not force them to sell at a loss to someone who can take advantage of this tax credit.

By: Kevin Schmidtchen

Kevin Schmidtchen — Mon, 09 Feb 2009 12:18:38 +0000

Who knows what the buyers would do in this situation. Everyone has a different scenario. This potential $15K credit to me goes along the lines of timing the market which no one can do. I agree that there will be some interesting extensions here in the coming weeks but this will be along the train of thought of timing the market.

By: Tom Royce

Tom Royce — Sun, 08 Feb 2009 16:29:56 +0000

Art,

You are correct on a legal standpoint, absolutely. But I think that with buyers so scarce and the amount big enough, they will want to leverage the opportunity. Sure the seller can force the issue, but most will be hesitant to drive away any serious buyer in this market. My bet is most would readily agree to an extension with or without a concession.

Great point!

By: Arn Cenedella

Arn Cenedella — Sun, 08 Feb 2009 15:48:44 +0000

Tom
I enjoy your posts – good timely information and I like your perspective. I am happy to see your cautionary note that the bill is not yet LAW. Given all the twists and turns we have seen in our economy and in Wash DC the past 6 months, I would be careful to assume any result. Will there be income limits on this credit? In my market, the SF Bay Area – that will be a big issue given our average housing prices. I would also be careful about giving buyers the impression they can unilatterally extend close. Generally there is nothing in a contact that gives the buyer that right. An extension can be negotiated but is not guarranteed. Maybe the seller is in an echange, maybe the seller has his moving trucks lined up, maybe the seller needs to close on another house in a stronger market. I would agree in most circumstances an extension can be worked out by giving the seller financial concessions from same. And so buyers need to understand 1) nothing has been finalized and 2) your contractual obligations can not be changed without seller approval. This may be a small but I believe important distinction to meet.