Is $8k worth rushing this?
March 22, 2010 11:58 AM Subscribe
How bad an idea would it be to try to buy a condo before the new homeowner credit deadline (April 30th)?
It doesn't seem like another renewal is coming so it's now or never. Here's the rule:
"Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. "
Is this completely impractical to get done in the next 40 days or so? How long did it take you to get from finding what you liked to having a binding contract for your condo?
The other question: will the prices on lower-end stuff drop by $8k after the expiration making it pointless to rush?
It doesn't seem like another renewal is coming so it's now or never. Here's the rule:
"Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. "
Is this completely impractical to get done in the next 40 days or so? How long did it take you to get from finding what you liked to having a binding contract for your condo?
The other question: will the prices on lower-end stuff drop by $8k after the expiration making it pointless to rush?
It's not impractical at all, IF you're already put in time researching the market and have found the place you want to buy. Signing to closing is usually a month or less, and you still have 40 days to the signing deadline, so ... that's plenty.
I would strongly recommend getting a referral to a good buyer's agent in your area, they will be able to guide you through these questions in a way that is much more tailored to your situation.
As for the last question ... nobody knows. It's entirely possible. On the other hand, the market does tend to pick up a bit in the Spring / Summer, which may balance it out. It depends on your area.
posted by dacoit at 12:05 PM on March 22, 2010
I would strongly recommend getting a referral to a good buyer's agent in your area, they will be able to guide you through these questions in a way that is much more tailored to your situation.
As for the last question ... nobody knows. It's entirely possible. On the other hand, the market does tend to pick up a bit in the Spring / Summer, which may balance it out. It depends on your area.
posted by dacoit at 12:05 PM on March 22, 2010
You're reading it wrong. You have to have a certified acceptance of offer by april 30. You actually have until the last day of June to close.
posted by TomMelee at 12:12 PM on March 22, 2010
posted by TomMelee at 12:12 PM on March 22, 2010
Ok, well, maybe you're not reading it wrong, but we just bought a house before the last deadline increase (we closed ON Dec. 31), and we told a few days before we had a pretty big window. She told us (showed us, somewhere) that the offer has to be accepted by the last day and paperwork in motion (loan approved, etc), but closing could happen as late as last day of June.
posted by TomMelee at 12:13 PM on March 22, 2010
posted by TomMelee at 12:13 PM on March 22, 2010
A binding contract is easy and fast. You make an offer, if it's accepted it's a binding contract. Usually there will be counter-offers by the seller and by you, as well, but any point at which both parties have reached mutual acceptance of terms, the contract is binding. You can easily do this in a week or two, if you think the deal is right and the sellers are not trying to play you off a bunch of other potential buyers.
We are actually having a house built and it took us a total of two weeks to go from seeing the model the first day to having a binding contract. (As it turns out, we will miss the tax credit, since the house won't be finished until July. However, we looked at other houses we could buy by the deadline, and they were all more expensive and would need substantial work to make them as nice as the new house. Plus the new house is under warranty for ten years. So, given that we are ready to buy now, and interest rates are extremely favorable, we decided to go ahead. If they complete the house early, which is possible, or if the government extends the tax credit, well then, bonus for us!)
Now if you haven't started looking for a place yet, then 40 days might be cutting it fine, but possible. Expect to do all the legwork yourself, searching real estate Web sites for condos you want to look at and arranging with the listing agent to see them. (The listing agent will want to know if you are working with an agent yet, since they will want to hook you up with someone in their office. So do get an agent, but again, do a lot of work yourself.) A lot of people are going to try to do what you're doing. If you expect your agent to do all the legwork for you, then you will be competing with a lot of other buyers who are doing the same thing. If you go to an agent and say "I want this condo" then they will just love you. They get a nice commission for doing a tiny fraction of the work they usually do.
As to what prices will do when the tax credit expires, builders are already dealing with this since at this point they can't finish a new home by the end of June. What they are doing is raising prices by $10,000 and then offering $8,000 back at closing. Depending on what the real estate market is like in your part of the country, $8,000 may be a little tiny part of the price of the house or a substantial part. If prices are low, I would expect to see some concessions, maybe not $8000 but $4000 or $6000 drops wouldn't be out of the question. If houses are a half million then $8000 is a drop in the bucket anyway so I wouldn't expect much motion.
posted by kindall at 12:17 PM on March 22, 2010
We are actually having a house built and it took us a total of two weeks to go from seeing the model the first day to having a binding contract. (As it turns out, we will miss the tax credit, since the house won't be finished until July. However, we looked at other houses we could buy by the deadline, and they were all more expensive and would need substantial work to make them as nice as the new house. Plus the new house is under warranty for ten years. So, given that we are ready to buy now, and interest rates are extremely favorable, we decided to go ahead. If they complete the house early, which is possible, or if the government extends the tax credit, well then, bonus for us!)
Now if you haven't started looking for a place yet, then 40 days might be cutting it fine, but possible. Expect to do all the legwork yourself, searching real estate Web sites for condos you want to look at and arranging with the listing agent to see them. (The listing agent will want to know if you are working with an agent yet, since they will want to hook you up with someone in their office. So do get an agent, but again, do a lot of work yourself.) A lot of people are going to try to do what you're doing. If you expect your agent to do all the legwork for you, then you will be competing with a lot of other buyers who are doing the same thing. If you go to an agent and say "I want this condo" then they will just love you. They get a nice commission for doing a tiny fraction of the work they usually do.
As to what prices will do when the tax credit expires, builders are already dealing with this since at this point they can't finish a new home by the end of June. What they are doing is raising prices by $10,000 and then offering $8,000 back at closing. Depending on what the real estate market is like in your part of the country, $8,000 may be a little tiny part of the price of the house or a substantial part. If prices are low, I would expect to see some concessions, maybe not $8000 but $4000 or $6000 drops wouldn't be out of the question. If houses are a half million then $8000 is a drop in the bucket anyway so I wouldn't expect much motion.
posted by kindall at 12:17 PM on March 22, 2010
You might have difficulty getting to an agreement (or closing by June 30) on a short sale contract, but as for a conventional sale or even an FHA sale, it seems like you'd be fine.
posted by Happydaz at 1:57 PM on March 22, 2010
posted by Happydaz at 1:57 PM on March 22, 2010
If it's not a short sale, you should be able to get it done fine. The real challenge is simply finding a place you like that's in your price range. Mine was a short sale and it took 4 months to the day from offer accepted (and thus, technically, binding contract) to offer accepted by seller's banks. But it was a yes, so that was nice.
posted by disillusioned at 2:18 PM on March 22, 2010
posted by disillusioned at 2:18 PM on March 22, 2010
It should also be said that this is $8,000 in refundable tax credit, which means even if you don't owe that much, they give you a check for the rest as part of your refund, and it's not taxable. This was enough money for me to buy a really nice dining room set, chairs, a couch, tv, tv stand, pillows, a nice rug, some ottoman things, nightstands, and a few other seriously nice things. Money that I literally would NOT have had otherwise. Definitely worth it to me.
posted by disillusioned at 2:24 PM on March 22, 2010
posted by disillusioned at 2:24 PM on March 22, 2010
We were able to close our purchase within 40 days of the binding contract date, which provided enough time between contract and closing to lock in on a low rate and for the mortgage application to be processed.
Your bid may likely be taken more seriously if the closing date is closer to the contract date, which helps you in terms of meeting the June 30 deadline.
It seems like a good time to buy all around, $8K refund notwithstanding. The market is in a trough and mortgage rates are historically low.
If it's a place you really want to live, make a bid or underbid based on what you want to pay and see where it goes. If the seller is motivated and serious, you'll get a contract or a counter-bid that could lead to a contract. You can certainly meet the June 30 target if you find a place in the next few weeks.
posted by Blazecock Pileon at 2:29 PM on March 22, 2010
Your bid may likely be taken more seriously if the closing date is closer to the contract date, which helps you in terms of meeting the June 30 deadline.
It seems like a good time to buy all around, $8K refund notwithstanding. The market is in a trough and mortgage rates are historically low.
If it's a place you really want to live, make a bid or underbid based on what you want to pay and see where it goes. If the seller is motivated and serious, you'll get a contract or a counter-bid that could lead to a contract. You can certainly meet the June 30 target if you find a place in the next few weeks.
posted by Blazecock Pileon at 2:29 PM on March 22, 2010
If you are looking for condos - make sure the building has 4 or more units or it won't qualify for an fha, fannie mae or freddie mac loan making it really difficult to get a mortgage.
posted by useyourmachinegunarm at 7:22 AM on March 23, 2010 [1 favorite]
posted by useyourmachinegunarm at 7:22 AM on March 23, 2010 [1 favorite]
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posted by Tomorrowful at 12:03 PM on March 22, 2010