The $8,000 first time home buyer tax credit ($6,500 for existing homeowners) is scheduled to expire April 30 (sales contracts signed by April 30 have until June 30 to close).

I’ve written a LOT about this tax credit over the past year. Depending on who you chose to believe, the tax credit has been wildly successful or a miserable failure in helping the real estate market recover.

Personally, I think it falls somewhere in between those two extremes.

I’m sure some people have bought homes only because of the credit. Let’s face it, eight grand is a decent chunk of change.

But buying a home solely to score $8,000 is a bad idea. Do that, and you’ll likely find that $8K evaporates swiftly. “Incentivizing” people to buy homes is fundamentally a bad decision on the government’s part. Personally I have yet to run across a home buyer that is buying now solely because of the tax credit. I’ve heard other agents though claim it has increased sales. I wonder though, how many of these agents asked the specific question, “Are you buying now only because of the tax credit?” My guess is most people buying now and getting the tax credit would have bought in the near future anyway, and if that is the case, how exactly does this credit stimulate the housing market?

I’d rather see the government step out of trying to influence the real estate market. It will self-correct, albeit not as quickly as most would like.

Now word is starting to trickle out of Washington, D.C. that certain entities (notably the NAR — National Association of Realtors) are lobbying Congress for yet another extension of the home buyer tax credit (see Wall Street Journal, Take Three; Will Congress Extend the Home Buyer Tax Credit?).

From the NAR’s website:

NAR Policy:

NAR strongly supports the first-time homebuyer credit. NAR also believes it should be extended through 2010.

Legislative/Regulatory Status/Outlook:

Senate Finance Committee Chairman has taken a very vocal and strong position that the homebuyer credit will not be extended again and that it will expire on April 30, 2010, as presently scheduled. The transition rule through July 1 will be retained.

My gut feeling is the tax credit will not be extended again. During the debate on the current extension last February, several Congressmen and Senators publicly stated that would be the last extension. Now these are politicians of course, and we all know they can flip-flop on statements and issues. I just called Senator Johnny Isakson’s office and spoke to one of his staffers. Senator Isakson was the Senator who pushed hardest for the original tax credit and the last extension. His staffer Ryan told me there was currently no planned legislation that she was aware of and that Senator Isakson currently had no intention of introducing legislation to extend the credit again.

That’s not to say that some other Senator or Congressman couldn’t step up and try to take this on. The NAR has a lot of pull in D.C. and I suspect (but have not been able to confirm yet) that other Realtor associations, home builders and the like will push the lobbying efforts to extend the credit.

Time will tell I suppose. Prior to the last extension I would have bet big on the extension. Right now, I’d bet that is will not be extended. I certainly could be wrong. That happened once.

Here are result of a completely unscientific poll I took before the last extension:

I’ve opened up a new poll asking if the tax credit should be extended again. I’d appreciate it if you could take this poll and you are of course welcome and encouraged to leave a comment on how you feel about the tax credit being extended again.

In hindsight, I should have added a “no opinion” option on the poll. Let’s face it though, you probably should have an opinion, even if you have zero intention of using the tax credit. Whether you utilize it or not, you’re paying for it…

I’ve been running this poll on Twitter for the last couple of days and would love to get more responses. No registration is required, and no one will see your answer.

Of course it’s not a scientific poll by any stretch of the imagination, but it’s interesting data none the less…

It’s easy… just select your choice and click “vote”. You’ll then be taken to the results page.

Here’s a clip from CBS5 News with a small portion of my thoughts on the home buyer tax credit. But don’t let that influence your selection…

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UPDATE Nov 6: According to UPI, President Obama has signed this legislation. NOW it’s official.

The extension of the existing $8,000 tax credit for first time homebuyers is now all but a done deal.

Moments ago, the House of Representatives passed HR 3548 – The Unemployment Compensation Extension Act of 2009 with a vote of 403 -12.

“Whoa, hold on there Jay. You said the tax credit extension was passed. What’s up with linking to some unemployment legislation?”

That would be because the Senate attached an amendment (SA 2712, Section11) to HR 3548 that extends (and expands) the home buyer tax credit. The Senate passed the amended HR 3548 on Wednesday by a vote of 98 – 0.

The bill now moves to President Obama’s desk for his signature into law. Some mainstream media is reporting the President will sign this on Friday, November 6. THEN, and only then, will the tax credit truly be extended and expanded (regardless of whatever you may read on Twitter, on blogs, and in the press).

So what’s in the bill?

Amendments are difficult to read as they cross-reference multiple documents and contain gobbledygook that looks like this:

(1) by striking “and” at the end of subparagraph (M),

(2) by striking the period at the end of subparagraph (N) and inserting “, and”, and

(3) by inserting after subparagraph (N) the following new subparagraph:

“(O) an omission of any increase required under section 36(f) with respect to the recapture of a credit allowed under section 36.”.

Good luck deciphering that…

Here’s what I’ve gleaned from reading the amendment, cross-referencing it, and digesting various media reports:

The “New” Home Buyer Tax Credit Details

• The existing $8,000 tax credit is extended to May 1, 2010. (The credit is for 10% of the home purchase price, up to $8,000.)
• If a home buyer is “into a written binding contract before May 1, 2010”, and they close on that contract before July 1, 2010, the tax credit can be claimed.
• A new tax credit for “long-time residents of same principal residence” has been created. This has been reported in many places as a tax credit for “move up buyers”. Here is the actual verbiage of the new tax credit for existing home owners:

  EXCEPTION FOR LONG-TIME RESIDENTS OF SAME PRINCIPAL RESIDENCE.–In the case of an individual (and, if married, such individual’s spouse) who has owned and used the same residence as such individual’s principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence, such individual shall be treated as a first-time homebuyer for purposes of this section with respect to the purchase of such subsequent residence.

• The tax credit for existing “long time resident” home owners purchasing a new home is 10% of the purchase price, up to $6,500.
• The old $8K credit had income limits of $75,000 for singles and $150,000 for married couples filing jointly. The income limits have been increased to $125,000 / $225,000.
• No credit shall be allowed for the purchase of any residence if the purchase price exceeds $800,000.
• All of this applies to primary residences only. No second home or investment properties are eligible for the tax credit.
• For members of the Armed Forces deployed on duty outside the United States, the tax credits are extended to May 1, 2011 (must close before July 1. 2011) Must be deployed outside the U.S. for at least 90 days between Dec 31, 2008 – May 1, 2010.
• “Fraud prevention” measures have been implemented. The tax credit can not be claimed by anyone under 18 years of age (some knucklehead tried to put it on the tax return of a four year old). Also, a “properly executed copy of the settlement statement used to complete such purchase” must be attached to the tax return claiming the credit (I take this to mean a copy of the signed HUD-1 Settlement Statement. But check that with your tax advisor!)

That’s it in a nutshell.

Of interest: According to economists at Goldman Sachs, around 70% of all current homeowners would be eligible for the expanded home buyer tax credit. The NAR and other Realtor Associations will no doubt be salivating over the extension and expansion of the tax credit. Some Senators have said that the chances of the tax credit being extended again come next April 30 are virtually zero.

Personally, I’m not a fan of the tax credit extension. I realize that flies in the face of a large majority of my fellow real estate agent / broker brethren, but that’s how I feel. It’s going to cost a TON of money (almost $11 billion by some estimates), and I am far from convinced it encourages people to buy homes (and if it does, that’s one BAD reason to buy a home).

Disclosure: I am clearly not an elected politician and my interpretation of the legislative text could be incorrect. Also, I am not a lawyer nor a tax professional, nor do I have any desire to be either. You should seek their counsel.

AND DON’T FORGET!! Until President Obama signs this bill, it’s not in effect!

Sources:

HR 3548
SA 2712 (Sec 11 is the applicable section)

Associated Press: Congress set to expand homebuyer tax credit
Wall St Journal: Tax Credit Extension Would Keep Home Prices Up
CNN Money: Senate throws a lifeline to the jobless

National Association of Realtors, Government Affairs: Here is a GREAT summary of the current and proposed home buyer tax credits (PDF file).

Good grief.

I’m seeing all sorts of communication coming across Twitter, blogs, Facebook et al such as this:

Home Buyer Credit is Extended! Yeah!

The tax credit as been extended and includes repeat buyers.

I have confirmed the $8k tax credit with CPA as well as mortgage regional manager

Homebuyer tax credit deadline extended…a $6500 credit given to those primary home purchasers.

Extended!! First-time home buyer tax credit and NEW current homeowner tax credit!!!

And this goes on and on and on.

Here’s the deal folks, and pardon my shouting, BUT THE TAX CREDIT HAS NOT BEEN EXTENDED!

I’m not saying it won’t be. In fact, it is looking like it probably will be extended and maybe even expanded to include “move up” buyers as well as having the income limits raised.

BUT IT HASN’T EVEN BEEN FORMALIZED AS A BILL YET, and not one single Senator or Congressman has cast a vote for (or against) a tax credit extension.

Period.

This “reporting” by droves of people, the vast majority of which are real estate professionals, that the tax credit has been extended is completely and utterly incorrect.

And in my opinion, it’s incredibly unprofessional.

READ the mainstream articles your are linking to people.  Statements like these should be your first clue:

Senate negotiators reached a tentative deal…

If the Senate actually passes the bill, the House, where over two dozen versions are floating around, may finally decide to act.

The White House doesn’t fully support the extension and expansion because it’s concerned about the cost and adding to the deficit.

Senate likely to extend homebuyers’ tax credit

When you see words such as “negotiators”, “tentative”, “if”, “may”, “likely”, etc. that is a pretty damn clear indication that nothing has been finalized.

The other huge clue that this extension / expansion isn’t final is in the Constitutional process that dictates how legislation is passed in this country.

Seen any press regarding the Republicans? How about the House of Representatives? Think it doesn’t matter that the White House “doesn’t fully support the extension and expansion”? Seen a Senate or House vote yet???

Don’t understand the legislative process? Crack open a government text book. Ask your kid. Watch this video:

For the love of humanity, please stop with patently false reporting that the tax credit extension is a done deal!

My friend Shane Hollenback, an outstanding Certified Mortgage Planner, summed up my thoughts on this ridiculous “reporting” in less than 140 characters:

A-freaking-men.

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Update: I originally posted this article under the title. “Sigh. THE TAX CREDIT HAS NOT BEEN EXTENDED. Yet.” I quickly realized the *sigh* could easily imply that I’m sad the credit hasn’t been extended. That’s not the case. Though I’ll likely be arrested by the Realtor Associations for Treason, I don’t think the credit should be extended (more on that later). The *sigh* was meant to signal a sigh of frustration for the lame ass “reporting” my fellow professionals are doing.

PLEASE read this article carefully. If you are reading this, “The Senate” has NOT passed anything to do with extending the tax credit. This article shares a report that Senate DEMOCRAT leadership has reached an agreement. And as noted, the Republicans are not saying anything other than “We’re close.” Once leaders reach an agreement, the full Senate will have to vote. Then the House. Then the President must sign before ANYTHING changes.

Scroll to the bottom for updated links. This thing is changing by the moment!

The news wires are buzzing today with near constant updates on the possible extension / expansion of the first time homebuyer tax credit, which is set to expire November 30.

This just in moments ago from Reuters:

Senate Dems reach deal on homebuyer credit – Dodd

Top Democrats in the Senate have reached an agreement to extend the soon-to-expire $8,000 tax credit for first-time homebuyers, Senate Banking Committee Chairman Christopher Dodd said on Tuesday.

“We have that. Done,” Dodd told reporters. He declined to specify the details of the agreement.

BUT….

a Republican who has worked with Dodd cautioned that they were still negotiating on the measure, which could come up for a vote on Tuesday evening as part of a package that would extend unemployment benefits.

“We’re close, we’re close but I can’t get into any details until it’s a done deal,” said Republican Senator Johnny Isakson.

My Take

This potential extension is in CONSTANT flux. Now we’ve got a Democrat Senate leader saying an agreement has been reached and the Republican doing the bulk of the work on that side saying “not so fast” (my words, not Senator Isakson’s).

Hang tight. I suspect something is going to break soon with more details.

And remember, a “deal” between lawmakers still has to get past a Senate vote. Then the House. Then the President. NOTHING is set in stone until all that happens.

Other Mainstream News sources:

On Oct 27:

Bloomberg: Senate Close to Deal Replacing Homebuyer Tax Credit
Reuters: Q&A US Senate closes in on homebuyer tax credit vote (updated 10/28)
Washington Post: The home-buyer tax credit: Throwing good money after bad [Great article!]

On Oct 28:

Reuters: Senators eye extending home credit to end of April – sources
CNN Money: $8,000 Home Credit Still in Play
CNBC: Senate Nears Deal on Keeping Tax Credit for Home Buyers
AP: Senators agree to extend homebuyer tax credit
Business Week: Expanded Home Buyer Tax Credit Likely

On Oct 29:

Washington Post: Extension of home buyers’ credit has wide Senate support
Wall Street Journal: Home Buyer Credit Gets New Life
Reuters: Obama admin urges Congress extend homebuyer credit

On Oct 30:

Bloomberg: Vote on Extending Homebuyer Tax Credit Delayed Over TARP Issue

On Nov 4:

Bloomberg: Senate May Pass Homebuyer Tax Credit Extension Today

Washington Post: Senate passes bill extending homebuyer tax credit, unemployment benefits (Senate has passed the bill. House approval “likely” and possibly as early as Nov 5).
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There has been a ridiculous amount of material written about the (up to) $8,000 tax credit for first time home buyers. I’m guilty as charged (here are links to my 16 previous posts on the 8K tax credit).

The current incarnation of the tax credit ends on December 1. You must close on a home by November 30 to qualify for the tax credit. Given that today is October 24, if you aren’t under contract to buy a home right now, there is virtually zero chance you’ll qualify for the tax credit as it currently stands.

Lawmakers are scrambling at this very moment to extend or possibly expand the existing legislation. Here is a summary of some of that activity:

• UPI is reporting that Senator Johnny Isakson, who has lead the charge for a home buyer tax credit in the Senate since Day 1 has reached a point of compromise. Isakson has always wanted to see the tax credit at $15K, not limited to first time buyers, and the income limits increased. According to UPI, Isakson will introduce an amendment for a six month extension rather than 12 month and keep the credit at $8,000. He will still try to expand it to all primary residence buyers and raise the income limit to $150K for an individual or $300K for a couple.
• The Wall Street Journal reports that Isakson is “cautiously optimistic” that an extension – with procedural safeguards attached to stem the ever-growing tide of fraudulent credit claims – can move ahead in the Senate next week.
• CNBC is reporting that Senate Majority Leader Harry Reid is making a counter-proposal to Isakson’s tax credit extension that will phase out through 2010:
  

  Under Reid’s plan, the $8,000 tax credit would be phased out over time, dropping to $6,000 in April, $4,000 in July, and $2,000 in October, before expiring at the end of 2010. The plan could come to a vote as early as next week.

Opinions are mixed about whether the tax credit should be extended. As I’ve said several times here, buying a home just to get an $8K credit is not a good idea. That 8K will be long gone before your commitment to buying is complete. There are many good reasons to buy a home, but if the tax credit is your primary reason, or if the only way you can get into a home is with that money, then (in my opinion) you’re making a mistake.

It looks like next week is going to be an interesting one on the legislative front with regard to the impending end of the homer buyer tax credit. We’ll keep a close eye on things and report back what we hear!

The first-time homebuyers tax credit is something I’ve written on extensively since it was first introduced back in February as part of the Stimulus Package. In it’s current incarnation, it is slated to expire on November 30 of this year (2009 for those that may be reading years from now…)

In order to be eligible for the (up to) $8,000 tax credit, you must CLOSE on a home buy November 30. Which given how long it takes these days to get financing and everything squared away, you’d better be under contract to purchase a home by October 15 – yes, that’s 10 days away. You might be able to get a transaction closed in 30 days (under contract by October 30) but that’s risky.

Today, White House Press Secretary Robert Gibbs mentioned potentially extending the tax credit a few times in his daily press briefing.  The complete transcript of that briefing is here. Below are the pertinent segments surrounding the home buyer tax credit, and the potential extension of it:

Question: Swapping to a different topic. The President said on Friday that the administration is looking at all measures to boost employment. What are some of those measures that we don’t already know about?

MR. GIBBS: Well, I think what the President — some of the things the President is talking about there — obviously there are a number of ideas that have been implemented that are coming to a legislative end, whether it is — that have helped the economy, whether it is extending certain unemployment benefits, whether we’re looking at the notion of extending some of the COBRA benefits. There’s tax credits like first-time homebuyers that have helped the economy. All of those are — certainly we’ve been working on for — with Congress for quite some time.

and…

Question: On the additional measures — you know, the COBRA, the extending unemployment tax, the home buyer — which one do you think has been most effective in terms of stimulus and creating jobs?

MR. GIBBS: Hans, I’m not an economist. Obviously, I think in terms of — as I said to Athena, I think when you’ve lost your job, making sure that you have health care is tremendously important. I think if you’ve lost your job having extended and enhanced unemployment benefits are tremendously important. Obviously, there has been quite a bit of success in the first-time homebuyer’s tax credit. And I think overall, the recovery plan has had a great and positive impact on our economy.

and…

Question: But extending these things, you don’t consider that a second stimulus?

MR. GIBBS: No.

Question: Why not, though, if they were in the first stimulus package — some of these things were included and then and you extend them, why is that not a stealth second stimulus?

MR. GIBBS: I appreciate the connotation. These are programs that are designed to help people that have lost their jobs. And I don’t think we would consider continuing a program for people that lost their jobs to be something other than just extending the current program.

Question: But the homebuyer tax credit in the first stimulus package, you guys extending it outside of the — it wouldn’t be a second stimulus?

MR. GIBBS: Again, decisions on this haven’t been made. I just was simply talking about what people had been discussing with Congress, and programs that are soon going to meet legislative deadlines.

Question: All those things, you would not consider that a second stimulus?

MR. GIBBS: Despite the — I’m sure you’d want to scurry off and write that we were planning a second stimulus, but that would be wrong. (Laughter.)

Question: Not particularly, but –

Question: What would you call it, Robert?

MR. GIBBS: What would I call what?

Question: These ideas, the extensions.

MR. GIBBS: Extensions. I thought your term was good.

Question: For how long?

MR. GIBBS: I don’t have –

Question: 2010 seems to be the idea that’s most –

MR. GIBBS: I think that’s certainly part that’s being bandied around in Congress, but I have not seen the particular proposals.

My take on what this means…

Keep in mind that like Press Secretary Gibbs, I’m not an economist. More importantly, I’m not a political analyst, and I last took a civics class thirty-something years ago.

Some “traditional” media outlets are reporting that Mr. Gibbs is indicating that President Obama and the White House support extending the homebuyer tax credit. I’m not convinced that “working with Congress” means the Administration is throwing its full support to extending the credit. As I’ve written here, there are numerous bills in both the House and Senate that propose extending and even enhancing the tax credit. Nothing I read in Mr. Gibbs statements to the press really say what the White House supports.

Heck, unless I’m misinterpreting the statement, “I have not seen the particular proposals”, Mr. Gibbs is indicating he isn’t aware of exactly what is currently on the table. (Obviously Press Secretary Gibbs is not reading Phoenix Real Estate Guy on a regular basis, or he’d know exactly what bills are in the loop and where they stand… that’s a joke.  Sort of.)

I don’t quite understand how extending unemployment insurance, COBRA benefits and the home buyer tax credit boosts employment. Extending UI and COBRA helps those that lose a job – few if any of whom would be in a position to buy a home. All of these items were a part of the original Stimulus Bill and I can see how extending any or all of them might be considered by some to be a second “stealth” stimulus.

But that’s all semantics. With regard to the home buyer’s tax credit the bottom line is this:

It is currently slated to end November 30. Obviously there is some support to extend the credit, and to a lesser degree expand the credit. It is likely political suicide for a Representative, Senator or the President to come right out and say, “the tax credit should not be extended”. But, it’s not entirely implausible for every one of the extension / expansion bills to die in Committee (where they all currently reside). Nor is it implausible for an extension or expansion to be worked out.

Who knows what will happen. If you are interested in purchasing a home and getting the tax credit you basically have two options:

1) Get under contract SOON.

or

2) Wait, and gamble the tax credit gets extended.

Will the tax credit be extended / expanded?

Beats the heck out of me. My gut instinct is telling me it will be extended but not expanded.

Do not however make any sort of purchasing go/no go decision based on my speculation. I could be completely wrong. It’s happened before.

What we are advising clients

Yes, $8,000 is a lot of money. But buying a home solely to take advantage of the tax credit is a bad idea. That $8K is going to be spent long before your tenure in the home is up. If you want to buy a home, great, go for it. But buy the right home that fits your needs. Don’t buy just for the tax credit. If you are in a position to buy a home, and get it closed before the November 30 deadline, then by all means take the tax credit. Just don’t push a major purchasing decision based on a tax credit.

UPDATE Nov 5, 2009: The Senate and House have both passed legislation extending and expanding the home buyers tax credit. See details here!

Back in June, I wrote an article, Homebuyer Tax Credit to be Extended? Expanded? That article linked to five bills that were circulating in the House and Senate that would either extend and / or expand the existing $8,000 tax credit for first time home buyers that is currently set to expire on Nov 30 (keep in mind a home purchase transaction must be closed by Nov 30 to qualify).

As of this writing (Sept 21, 2009) all five of those proposed bills are still stuck in committee.

However, a sixth bill to extend the tax credit was introduced in the Senate last week.

Senate Bill S1678 extends the existing first-time homebuyer tax credit to June 1, 2010. It makes no changes to the requirement that one must be a first time buyer (defined as not owning a home in the last three years) or to income limits that currently exist in the current law.

Here’s what I find interesting about this latest attempt to extend the tax credit

S. 1678 is co-sponsored by Senator Johnny Isakson (R–GA). “So what?” would be a natural reaction to that revelation. Here’s what: Senator Isakson was the impetus behind the original $15,000 tax credit proposed in the Stimulus Bill. That proposal was later trimmed to $8,000 and the first time buyer restriction was added before the Stimulus Bill was passed.

Senator Isakson is also the sponsor of  Senate Bill S1230 – the Home Buyer Tax Credit Act of 2009 – one of the five other bills proposed. S1230 goes back to Sen. Isakson’s original plan of a $15K credit for any primary residence purchase, not just hose made by first time buyers.

So the junior political analyst in me says, “Hmmm. Isakson wants $15K for any purchase, and now he’s co-sponsoring another bill that only extends the existing $8K credit. Has he given up hope on his $15K for every purchase dream?”

Seems like a reasonable question in my mind (and let’s have no snide remarks in the comments about the state of my mind please).

So rather than speculate, I called the Senator’s office and asked to speak to him.  Naturally the young staffer that answered the call wouldn’t connect me to the Senator…

But he did say that Senator Isakson still fully supports and believes in increasing the tax credit, extending the deadline, and including all primary residence purchases. He mentioned that as late as last week, Isakson had been on Bloomberg and spoken on the Senate floor to garner support for his original $15K tax credit bill.

The staffer felt that the Senator co-sponsored S1678 “just in case” he can’t round up enough support for S1230. I sensed frustration on the staffers part when he talked about how long Isakson’s bill has been in committee.

And of course, even if Isakson’s bill is passed by the Senate, it would still need to get through the House. The same House that nixed the 15K credit previously…

So will the $8,000 tax credit be extended?

That is anyone’s guess. This new Senate bill does have Harry Reid as a co-sponsor. As the Senate Majority leader, Reid obviously has influence, and his co-sponsorship could indicate Reid doesn’t feel there are enough votes to get Isakson’s version past the Senate.

But there is of course, a lot of politics involved. There is little question that tax credit has stimulated housing sales. Depending on whose numbers you believe, between 350,000 and 500,000 people have bought homes because of the tax credit.  Whether those people would have bought any way is (or should be) subject to debate. And whether or not the tax credit should be extended is (or should be) a matter of debate. The National Association of Realtors and local and state associations are clearly pushing for extension / expansion. My personal take is still being formulated, though I’m leaning toward not extending it. Blasphemy! will cry many in the real estate profession, but I’ve never been a fan of big government mucking about in a market economy – there are just way too many examples of where that has failed miserably. This debate is for another post though as there’s too much to go into here.

For now, the $8,000 tax credit for first-time home buyers is available – if you close on the home before November 30. We recommend being under contract by October 15 in order to maximize the possibilities of closing by the deadline. If you’re going to hold off hoping Washington extends the credit, you may wind up kicking yourself in the end.

We’ll keep tabs on this latest incarnation of the tax credit extension…

(Photo Credit: cliff1066 on Flickr. Creative Commons License)

Hat tip to Inman News and Senator Johnny Isakson Google Alerts!

As it stands right now, if you want to take advantage of the (up to) $8,000 tax credit for first time home buyers, you have about 6 weeks left to find a home, make an offer and have it accepted.

“But Jay, the credit is good through November 30, 2009. That’s 3 whole months!”, you may be thinking.

Not so fast Sparky. To take the tax credit you have to close on a home by November 30. Close as in transfer of ownership has to be complete, recorded with the appropriate legal entity. Closed as in you have the keys to the new home in one hand, and are carrying house-warming party invites in the other.

Typical time from offer acceptance to close is about 30 days. I’ve seen cash deals close in 4 or 5 days (how many first time buyers can write a check for a home?) and I’ve seen traditional financing transactions close in as little as 12 days. But that was “back in the day” and lending guidelines are vastly different now.

You need to allow yourself plenty of time to close on a home sale. Things can go wrong swiftly once an offer is accepted:

• There can be problems uncovered during the inspection period.
• The appraisal can come in low.
• Your loan underwriting can get delayed for a myriad of reasons.
• Loan funding can be delayed.
• There could be a cloud on the title that has to be cleared.

A good agent tries to foresee all the potential pitfalls and nip them in the bud, but things can arise that are beyond anyone’s control.

The more time you can allow, the better.

We recommend being under contract by October 15 just to be safe.

At the time of this writing, there are no less that five bills in the House and Senate to extend (and even expand) the tax credit. All have been stuck in Committee for weeks. So if you really want to roll the dice and live on the edge, you can hope the tax credit gets extended, or scramble like mad with a sub-30 day close.

Just be prepared to hit the Jack Daniels heavily if you guess wrong and close on Dec 1, leaving a refundable $8,000 tax credit on the table…

Here’s a clip of a CBS5 News segment that features one of our first-time homebuyer clients, Katie Fulkerson, with a cameo appearance by yours truly. They cut one of the most important things Katie said – while the tax credit is great, it shouldn’t be the primary reason for buying a home. Don’t buy something that’s not what you want just to score an extra $8K…

Photo Credit: Robbert van der Steeg on Flickr. Creative Commons License

We’ve written extensively on the tax credit available for first-time homebuyers (a restriction that may get lifted).

In many private conversations I’ve had, the general consensus has been that this tax credit hasn’t had much impact, that people really don’t care, that first-time home buyers aren’t buying that many homes, even that people are not aware of the credit.

Personally, we have yet to have a potential home buyer say, “The only reason we are buying now because of this tax credit”. (And that’s a good thing, as it is a horrible reason to buy if that’s the only reason you are buying.)

But that doesn’t mean the tax credit is not a factor. Many of our buyers mention it as one of several reasons they are buying; including the tax credit with things like historically low interest rates, low home prices, “good deals”, and the age-old “I’m tired of renting”.

Are people aware of the tax credit? Is there interest in it?

I’ll let the statistics for this blog speak. You tell me. Here are the top 25 search terms people used to find this blog last week.

18 of the top 25 search terms used last week were related to the $15,000 home buyer tax credit (a total of 1,416 visits).  Granted, these top 25 searches only account for 1,730 of the 12,058 visits here last week, but the point is people are looking for information on the tax credit, and presumably some fraction of those are acting on that information. For how many the tax credit is a major factor in actually deciding to purchase a home is the big question that can’t really be answered.

For the statistically obsessed, there were 8,210 visits here last week from search engines – and 5,096 search terms were used. That’s a testament to the “Long Tail” of search. (And if you care, 7,229 of those 8,210 searches were done on Google – a testament to the fact that Google is taking over the world.)

A total of 2,975 visitors using a search term that included “tax credit” stopped by last week – that would be 24% of the visitors to this site.

Since the tax credits were first discussed back in February of this year 31,168 searchers using 11,637 different terms including the words “tax credit” have visited Phoenix Real Estate Guy.

True, 31,000 people isn’t a lot compared to the general home buying population of the U.S. But this is just one insignificant spot on the vast, world wide even, web. If there are 31,000 people looking for information here, how many more are looking elsewhere?