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Home Buyers Tax Credit Extension Update

UPDATES! 

Friday 7/2 12PM: Done! The president has signed the bill.

Wednesday 6/30 10:30PM: Tax Credit Deadline Extension and Flood Insurance Extension passed by Senate. Headed to the President!!! (Isn’t in main stream media yet but we got it from a VERY reliable source).

Wednesday 6/30 1:30PM: The Associated Press is reporting that politics may get in the way of any extension to the Homebuyers Tax Credit

Tuesday 6/29 9PM: A friend at NAR: ” We are hopeful at NAR. However, there has been a war going on over at the Senate. Politics. Our lobbyists say the chances have improved but there are more politics ahead. This could go down to the wire tomorrow.”

Tuesday 6/29 6PM: CNN is reporting that the House just approved an extension. It still has to get Senate approval.

There has been some confusion about a possible extension to the Home Buyer’s Tax Credit. We asked Steve to clear up some misconceptions and, at the same time, talk about what it all means in the end.  – The KCM Crew

Let’s start by killing two rumors that are out there: that the extension would allow new buyers to be eligible for the credit and that the extension has already been granted.

1. The possible extension is only an extension on the closing date deadline of June 30th.

There were two different deadlines in the Tax Credit. The home had to be in contract by April 30th and closed by June 30th. There was never talk of extending the date to get the home into contract (April 30). The proposal was to allow buyers who were already in contract by the April deadline to close after the original June deadline.

2. The extension has NOT been approved.

Though it was reported by many that the extension was granted and by others that it was a ‘done deal’, it didn’t happen. The confusion started when some reported the Senate approved the extension two weeks ago. The Senate did vote to approve an amendment extending the deadline. This amendment was part of a much larger bill. The larger bill then failed to get Senate approval thus ending the approval process for any amendments (including the extension) in that bill.

Where does the extension stand today?

For any chance of an extension, Congress must reattach the amendment to another bill or make the extension a standalone bill to be voted on. The National Association of Realtors (NAR) and others are fighting diligently to get this done. Ken Trepeta, the Director of Real Estate Services for NAR, let me know on Friday:

We may still get this extension and our people and others in the Realtor family have been working on it on multiple levels (separate bill, attach to another bill, ditto for flood insurance which is also important), but time is running out. The safe bet is to close all the deals that are eligible now. Those who didn’t make it might still get the closing extension but it is increasingly unlikely that we will know that before June 30th and I am not sure when, or if, it will get done. Stay tuned!

Trepeta is referring to the fact that Congress may grant an extension after June 30th and make it retroactive to that date.

What does this mean to you?

If you are selling…

It depends on how your contract reads. Be prepared to perhaps renegotiate your deal and ‘sweeten the pie’ for a buyer who could be upset that he lost the tax credit. Do not let your ego get in the way. The most recent housing reports suggest strongly that it may not be easy to replace your current purchaser. Even if you do, there is no guarantee that you will sell at the same price or that the house will appraise.

If you are buying…

You have found a home that you believe was worth the price you paid. The bank agreed. You have made all sorts of plans for the new home. Don’t be willing to give this up easily. You could jump back into the market and perhaps find a comparable house. However, if you close this week, you will be getting one of the best mortgage interest rates in American real estate history. There is absolutely no guarantee that will happen later in the year if you push off this opportunity.


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