Time’s running out

Published 8:17 pm Monday, September 28, 2009

It’s a great time for first-time homebuyers to purchase a new home.

But area real estate agents caution that time may be running out on the tax credit that is contributing to the “unbelievable” deals that await those looking to buy their first homes.

An $8,000 federal tax credit for first-time homebuyers expires Dec. 1, but real estate agends say there may be only a couple of weeks remaining to take advantage of it.

“You’d better get on a contract in the next two weeks,” said Harry Cross of Suffolk’s RE/MAX Acrosstown.

“I think there’s an excellent chance (Congress) may extend it, but I wouldn’t take that chance if I were a first-time homebuyer.”

Cross said interest in Suffolk in the tax credit has been limited, because a lot of area residents still don’t have the cash they need for downpayments and closing costs.

“You still have to bring 3 or 3.5 percent to the table to do it,” he noted, explaining that the government issues a check for the tax credit after a buyer has completed and submitted paperwork on his purchase.

Still, those who have been able to afford the necessary downpayments have found themselves in the middle of great deals as a result of the federal program.

One recent client, he said, provided a good example.

“He got the house he wanted, at the price he wanted, and (the government) is going to send him a check.”

Coupled with an extremely competitive market in the $75,000-to-$150,000 range — where the market is up 38.8 percent over last year — the tax credit can mean that buyers are getting 5 percent to 10 percent off the cost of their homes.

Under the program, someone who has not owned a home during the past three years can get 10 percent of the purchase price — up to $8,000 — back from the government if they meet certain earnings requirements. The income limit for a single taxpayer is $75,000 a year, and for married taxpayers filing a joint return, the limit is $150,000. The tax credit amount is reduced for buyers with modified adjusted gross incomes higher than those levels.

Since it is a refundable tax credit, the credit can be claimed even if the buyer has little or no tax liability.

But even buyers who do not qualify for the tax credit can find reasons to buy right now, Cross said.

With the supply of available housing at a peak, sellers are finding that they must be competitive in pricing their homes if they want to sell them quickly.

“It’s still about price,” he said, noting that most sales are taking place in the bottom 15 percent of each price bracket. “They’ve got to be very well-priced and have no issues, because (a buyer) can go out and find one that doesn’t have any issues.”

For buyers, that means it’s a good time to act.

“There’s excellent supply,” he said. “Go find the one you want and make an offer.”