It’s already September and the $8,000 First Time Homebuyer Income Tax Credit (ITC) ends on November 30, 2009. That means that buyers hoping to take advantage of the ITC need to close on or before November 30.
Assuming that the “average” conventional loan is taking 30 days to close, 45 days for the “average” FHA, 60 days for the “average” VA loan, these buyers need to be UNDER CONTRACT on a property within the next 30 days! It’s time for the last-minute lookers to get in gear and begin their searches.
THE GOOD NEWS
A recent agent poll published in REALTOR magazine asked agents across the nation about their challenges in today’s market. The good news is that REO properties are becoming “easier” to deal with as the banks’ staff and asset managers streamline their processes. REO deals seem to be almost normal now.
Banks allow and encourage inspections, share whatever inspection reports they may already have, and communicate by email now so we have written paper trails of the negotiations. Title issues are still a problem from time to time, though, so get that title search done early!
THE BAD NEWS
The bad news for agents, though, was in the field of Short Sales. Almost every single agent reported that negotiating deals for Short Sales was the most frightening, time-consuming, frustrating, demoralizing and complex experience in real estate today.
Why? Because of the confluence of:
- sellers not being candid or honest about their situations
- banks not being staffed to handle the flood of Short Sale offers
- bank staff not being trained on the Short Sale process
- sellers unwilling or unavailable to complete the Short Sale package demanded by their lender(s)
- lack of communication between various mortgage lien holders on the same property
- real estate agents who call themselves “experts” on Short Sales but who deluge sellers’ lenders with an abundance of very low offers and clog up the system (and the lender turns them all down)
- buyer’s agents untrained on the Short Sale process who get a sudden dose of reality when another, later offer comes in on the house their buyer has “under contract” and pushes the first buyer out of contention
- buyers also caught unaware.
30 to 180 DAYS TO CLOSE ON SHORT SALES
Agents are reporting that Short Sale contracts are taking from 30 to 180+ days to be approved by the seller’s lender(s). And the more lenders, the more time needed.
Does it make sense to take a buyer wanting the $8,000 First Time Homebuyer Tax Credit to look at Short Sale properties at this time? Unless Congress extends the ITC, which they won’t even discuss until they reconvene in September, no. No, it’s not worth the risk to the buyer that he/she won’t be able to close by November 30, 2009.
Just my opinion, but, hey, I only get the calls from the disgruntled buyers…