Over the first few months of this year a lot of people who might not otherwise have been looking for new homes decided to move their timetable up, and purchase the home of their dreams because of the first time homebuyer tax credit. Why not move things up a bit if you can get $8000 cash? When the credit was extended to current homeowners as well, things really started to heat up.
April 30th was the hard and fast deadline to be able to get a signed contract and still qualify for the tax credit. Most people were able to reach that deadline with no problem, however, some are now thinking that they're going to miss the June 30th deadline to complete the sale. If they do, they'll get no credit.
Tax Credit Closing Deadline Extended?
Now there is an amendment to H.R. 4213, “the American Jobs and Closing Tax Loopholes Act of 2010” bill being offered that would offer extra time for homebuyers to close the sale.
The amendment, which is attached to another bill, is being sponsored by Senate Majority Leader Harry Reid, D-Nev., Sen. Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn. It was passed by the senate this week, and now needs to be passed by the House.
The bill would simply extend the time available to homebuyers to complete the sale on their new homes from June 30th to September 30th. So will it pass?
Many Sales May Not Complete Without Extension
The National Association of Realtors has been pushing hard for this bill, but many are saying that even with the extension, many of the sales – especially short sales – will still not complete.
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.”
So a lot of people out there are in a holding pattern, hoping to get their credit. Some of them may get it because of the extension, but it sounds like a lot of folks who are buying short sales still may end up being left out in the cold.
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.
So now it is up to the House to get this bill passed so that some homebuyers can be helped. The question remains – how many will it help?
What do you think – should the deadline be extended past the June 30th deadline? Will it be enough time for most unclosed sales, or will it be a pointless exercise? Tell me your thoughts in the comments!