Chance Gates' Blog

The clock is ticking on the federal homebuyer tax credit.

Homebuyers still have time to buy a home and meet the deadlines, but they will need to act soon and be proactive throughout the transaction.

The homebuyer tax credit is worth 10 percent of the home’s sale price, up to $8,000 for buyers who haven’t owned a home in the previous three years and up to $6,500 for buyers who have owned and occupied a principal residence for at least five consecutive years during the eight-year period that ends on the day the new home is purchased.

Here are some tips for last-minute buyers:

• Buyers should be “upfront with their Realtor about their must-haves and their wish list,” says Allyson Bernard, owner of Real Estate Professionals of Connecticut. Buyers who aren’t realistic could find themselves up against the deadline with fewer houses from which to choose.
• Harsh weather may be “a help or a hindrance,” Bernard says. Buyers who are willing to trudge through snow to find a house may have an advantage over buyers who wait until the weather improves.
• Contract contingencies allow buyers some breathing room to take care of big items such as financing, inspections and the sale of their current home, Bernard says. But contingencies shouldn’t be an excuse to delay once the deal is pending.

“If you run into a problem and you no longer want to buy that house, it’s great that you had those contingencies to protect you, but you may not have time to find another property,” she says.

• Anecdotal reports suggest that some buyers have included a tax-credit contingency in the purchase contract. Whether that’s a necessary protection to make sure the deal closes on time depends on the situation and local practices. Either way, buyers should read the contract to make sure the closing will occur before the deadline.
• Buyers should get preapproved for a mortgage, because glitches such as a mistake on a credit report or a lender’s request for tax returns that must be retrieved from the IRS can cause a delay, says Patti Ketcham, owner of Ketcham Realty Group in Tallahassee, Fla.

“You don’t want to wait until the last minute, because you could end up shooting yourself in the foot over something that’s no one’s fault, but you just run out of time,” she says.

• Buyers also should allow extra time in case the mortgage lender requires a second appraisal, which can delay final loan approval.

“The appraisal process in residential lending is going through some painful changes. It is not uncommon to have a mortgage lender require more than one appraisal,” Ketcham says

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