Home Buyer Tax Credit – Is The Deadline Really April 30th?

Most people are aware of the $8000 home buyer tax credit and the official April 30th deadline to be eligible. If you are unaware or want more detailed information, here is a list of questions and answers regarding the tax credit that may be helpful. time is running out on the home buyer credit 

However, while many think they have plenty of time to act, based on how a real estate transaction works, and the many obstacles that can sometimes get in the way, buyers should be warned that time is running out and waiting until the end of April to find a home could be a bad move, and here’s why:

1.     Loss of leverage. If you wait until the last minute, the sellers will realize that you stand to lose $8000 if you don’t get under contract by the deadline, and may play hardball during negotiations.

2.    Loss of money  – Let’s say you do get under contact by April 30th and inspection issues then arise. Negotiating repairs or a reduction in purchase price during the month of May, AFTER the deadline has already passed could be difficult. Will you be willing to walk away from a home because of $3000 worth of repairs and risk losing the $8000 credit? Probably not, and the sellers know this as well.

3.    Loss of the entire $8000 credit – Once again, even if you do get under contract by the official deadline, what happens if something comes up during the inspection or financing process that kills your deal. If you have passed the official deadline or don’t have enough time to find another home, no credit for you!

4.    Increased competition toward the end of April – An increased demand for homes in April due to the credit could create a temporary sellers market, driving up prices and creating bidding wars. Good news for sellers, bad news for buyers.

5.    Rates may increase over the next 90 days – Interest rates are at historic lows. However, many experts believe they will start to creep up after the end of the first quarter ( March 31st ), meaning increased monthly payments to home buyers who wait.

In light of this information,  we have a simple tip for buyers:

Make April 1st your unofficial deadline to get under contract. This way, if for some reason inspection issues come up or something keeps your transaction from moving forward, you will still have time to move on to option 2 ( hopefully you have one ) and take advantage of the tax credit. 

Oh, and, for buyers who don’t act because they think the tax credit will be extended again, don’t count on it. With midterm elections coming up, and the American public in an uproar over spending on Capitol Hill, a costly extension will not happen.

So what are you waiting for? Go pick out a great home and get paid $8000 by the government, and whatever you do, don’t wait until the last minute or you’ll have no one to blame but yourself if things don’t work out. 

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About The Authors:

This information is provided compliments of Amy and Dan Schuman, The Schuman Team Keller Williams Realty. The Schumans service both the East and West sides of Cleveland and specialize in assisting first time buyers, luxury home buyers, and those who are relocating to Cleveland.

If you are looking to buy or sell Cleveland real estate, including the surrounding suburbs, please contact the Schuman Team at 216-346-3235. 

 

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Home Buyer Tax Credit – Is The Deadline Really April 30th? is the property of The Schuman Team and may not be duplicated or used without their written consent. ©Feb,2010

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