2009 Homebuyer Tax Credit…Time is Getting Short

Westcoe Realtors, Riverside California…I’m back from my vacation, and I am happy to recommend one to all.  Overrated they are not!

So…lots to catch up on in the coming days, but it’s best to start with a situation that has a deadline.  Specifically, let us chat about the $8,000 first time home buyers credit, that was passed in March of this year (2009) and has an ending date of December 1, 2009.

While the current Federal Administration may change the rules to this tax credit program if they so desire (and changes are not unheard of…Health care program anyone?), the deadline as it exists today is very clear that if you are purchasing a home in the anticipation that you will receive the aforementioned $8,000 tax credit, you must close escrow on that home by December 1, 2009.  That means closed escrow…not “trying” to close, not ”entering” escrow, not “looking” for a home, not “scheduled” to close and whining about unexpected delays….it means closed…period.

In working it backwards, we will start with a scheduled close of escrow of November 15, 2009.  This will allow for 2 weeks of delays…which trust me, will happen.  Between the usual screw-ups that all bank owned properties encounter from overworked asset managers, and the traditional days off many people take around Thanksgiving, you are far ahead of the “tax credit game” if you plan on a mid November closing.

That means that to make things safe, you better have your offer accepted and entering escrow no later than October 15…and you would be much safer to be in escrow by October 1.  Escrows can be done in 30 days, but everyone has to do their job as efficiently as possible…and when was the last time anyone saw that happen.  An escrow depends on buyers, sellers, both agents, escrow officers, new lenders, appraisers, title officers, home inspectors, termite company, insurance agent, and any repair work that may crop up in your purchase to all function together.  This they will do, but not necessarily in the time frame you desire.  Therefore, you may ask for a 30 day escrow, and you may get an agreement on a 30 day escrow, but in all reality, you are best to plan for 45 days to be safe.

Therefore, given that we  would prefer to be in escrow by October 1…and given that with the purchase of any bank owned property, the time it takes to get an answer on your offer can be up to 2 weeks, then your offer should be written and presented to the listing  agent for the bank by September 15…which means that in many cases, you have approximately 30 days from now to make your tax credit happen.  And we wonder where the expression “Time Flies” comes from.

Obviously, I have built in some time pads here…and life may not be over if you get your new home in escrow later than our example above.  However, the point here is that unless the rules change, the absolute date to have your home closed is by November 30, and if you understand this, and both plan and expect delays in your escrow, then perhaps you can meet your goal of getting the $8,000 tax credit without getting a heart attack along the way.

Take care, it’s great to be back, and as always, if there is any issue you would like to see addressed in this blog, just let us know.