All the talk among Realtor’s, Mortgage Brokers, Investor’s and first time home buyers is about whether or not the first time home buyer $8,000 tax credit will be extened past May 1, 2010. Everyone working in Real Estate has enjoyed the surge of sales this tax credit has provided during the past several months.
It appears certain that the $8,000 First Time Home Buyers tax credit will not be extended past May 1, 2010. Everyone is wondering what the impact will be while enjoying the final surge of people buying during this last week of April. Mortgage Brokers and Realtor’s are secretly asking one another what will happen next to the real estate market.
I am an investor and from my perspective we are still working right in the heart of the Perfect Storm caused by the glut of distressed properties on the market. Never before has there been such a transfer of real estate wealth caused by the greed of Wall Street. Today’s home buyers can purchase property as if shopping at Macy’s inventory reduction sale. Just like finding your favorite clothes marked down 30%, homes can readily be purchased at sharp discounts in most markets across America. I expect to continue to see some strong movement in the real estate market for the coming months due to the incredible deals that are readily available to home buyers.
The second reason I believe the market will stay strong for several months is the second condition of this perfect storm. Very low interest rates. With decent credit home buyers are still financing homes with interest rates in the low 5% range. In fact we have a closing on a home that was purchased from us scheduled to close may 7th and the borrower qualified for a rate of 4-1/8%. The very low interest rates will not last forever and the fact is they worth far more than the $8,000 tax credit, assuming the average American spends the $8,000 and does not re-invest it for a profit over the next 15 years.
The third reason I believe the market will stay strong for a while is the wide availability of grants. In Virginia where I live, and in many states across our nation there are many grants still available to first time home buyers. We recently sold another home in Virginia where the borrower qualified for a $10,000 grant. Again, that grant exceeds to return of the $8,000 tax credit.
The good news is that I believe homes will continue to sell for the next several months. The key to your sales is the same as always:
1. Property condition: There are a lot of homes still on the market; to make yours stand out from the others be sure it is 100% clean, clutter free and well maintained inside and outside. Be sure the outdoor space is appealing with a well cut lawn, mulched flower beds and trimmed bushes.
2. Marketing: The majority of home buyers begin their search on-line. Be sure that your home is marketed heavily on the internet. You should be sure to have your home listed onto the MLS either list it yourself with a great flat fee MLS listing service such as http://www.justlistem.com or find a strong realtor. Your home should be listed on craigslist, zillow and trulia along with the MLS. In addition to internet marketing and the MLS, be sure you have a property flyer along side a great for sale sign that is easily read when people are driving by your home.
3. Price: In this market you need to consider your listing price carefully. Take time to review the comparables of recent homes sold in your neighborhood, speak to a strong Realtor or simply have it appraised. You will want to price your home competetively and be sure to offer the new Buyer assistance with their closing costs to make it easy for them to purchase your home.
Sit back, relax and enjoy this perfect storm. There should continue to be strong sales for the next several months due to low interest rates, readily available grant funds and the continued great opportunities to buy.
What do you think the impact of no longer having the $8,000 first time home buyers tax rebate will be? Leave me your opinions in the comments. I would love to know your thoughts.
Jim Ingersoll
9 comments
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April 25, 2010 at 4:14 pm
Carlyn Lowery | http://www.AnnapolisRealEstateToday.com
Nice article, Jim. I just got two calls yesterday from buyers who suddenly want to have homes under contract this week. The impact of tax incentives and deadlines is huge.
You’re right about the keys to sales, you master of marketing.
May 3, 2010 at 10:46 am
joe
I hope it is extended…all the blogs I continue to see that are not in favor of it being extended are probably folks who are not trying to sell there homes right now! In my neighborhood in New Jersey there are 62 homes listed for sale and 5 have sold in the past 4 months and it’s a very good upscale neighborhood. The tax credit should be expanded to $15,000 dollars for first time buyers, $13,000 dollars to move up buyers and $6,500 dollars for anyone else who does not qualify for either. If you are NOT trying to sell your home RIGHT NOW you have no idea of what it’s like RIGHT NOW. My home has all new baths, a new kitchen, large lot 2,300 square feet of living and is fully loaded with upgrades. I have it priced below market value and I still can not can an offer on it. It’s been on the market for 5 months. I really think anyone who opposites the tax credit has no idea of what is going on in the real world right now.
May 4, 2010 at 7:53 am
Jim Ingersoll
Hi Joe
Good perspectives on your market. Real Estate is very local, sorry to hear your area sales are so poor right now. The tax rebates certainly did help a lot of markets start to rebound. It should be interesting to see what happens now that it is gone.
Best of luck
Jim
May 4, 2010 at 7:52 am
Jim Ingersoll
Carlyn – You are doing a great job in Annapolis! Keep it up
May 26, 2010 at 12:37 pm
Carol Schmitt
My house has been on the market for a couple months, I’m in no hurry as its completely paid off, I wanted to get a condo because of all the yard work I have to do. I wont drop the price again. I’ll take it off the market in July when the contract runs out. Without even 1 offer, dropping the price again just isnt worth it for me. Everyone thought it would of sold fast. I had 3 couples look at it. I think if I would have gotten it on the market sooner that the end of March I might have had a better chance but it took me forever to get all the updates done. We dropped the price down 20,000 below appraisal, which made it 229,900 one of the lowest 3 bdrm in the area. So now I have a nice and updated house to live in!!! I hired a lawn person to cut my 1 1/2 acres.
May 28, 2010 at 6:45 am
Jim Ingersoll
Hi Carol
You are in a very good position to wait it out. Congrats!
Jim
May 30, 2010 at 9:58 pm
Joe Engle
Thanks for your blog and comments about this.
I’m a veteran trying to buy my first place – a condo – with a VA Loan. This is challenging since the condo project needs to have been VA approved before I put a bid on it and since VA loan offers are not ‘as attractive’ as those with conventional loans or cash offers.
From my experience, there seems to be some disconnect still between Loan Officers and Underwriters. Twice the bank in one shape or another made a mistake by approving me for a certain amount, which they did not realize until right after my contracts had expired, which left me no recourse but to release myself from the contracts. Luckily for me the first time around in December the tax credit had been extended – it was a short sale which began in September 2009.
In 2010, I continued looking for another first place and was under contract in early April, but unfortunately for me, it was denied mid-May days before we thought we’d be closing. The reasons the bank ‘changed its mind’ were ones that could have been brought up during the first stages of the loan process, before monies were spent for inspections, etc. and weeks of time were wasted. Had that been determined ahead of time, I could have found another property and been under contract by April 30th.
Unless the credit gets extended I have no chance to regain this benefit that has slipped through my fingers one too many times due to poor communication between employees at the banks.
May 31, 2010 at 4:45 pm
Jim Ingersoll
Joe
I understand your frustrations and you make some valid points on the disconnects. Finding the right Loan Officer who is not disconnected is very important. Keep trying to move forward and you will be rewarded with a great home in the future. It is a great time to buy and worth your efforts.
Best of luck
Jim
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