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WHAT ABOUT THE TAX CREDIT?
Does anybody see the economic consequences if home buyers who have qualified for tax credits are not afforded the right to extend the closing deadline of June 30, 2010?
There is no argument that the tax credit gave a much needed jolt to the housing market and took thousands of abandoned and foreclosed homes out of inventory. It allowed many, the opportunity to be a homeowner for the first time or at least the first time in many years. It gave existing homeowners the ability to move up or move down.
For many, that dream of homeownership is about to vanish!! We are about to pull the carpet out from under them.
Qualified buyers who could never have considered a home purchase without the tax credit are anxiously planning to make their move.
But wait…. Stop packing…Are you one of the 5,454 short sales scheduled to close before the deadline in four Central Florida counties alone (Orange, Lake, Seminole, Osceola)?
That number represents 62% of all sales scheduled to close in the same time.
• How many met the deadline for contracting by April 30, 2010 and think that it is a done deal?
• How many of these closings are not even approved by the third party lender/investor?
• How many require financing?
• Can the underwriters and closing agents get the job done? The June number of expected short sale closings is nearly double the average closings in a month without including bank owned/REO or without closings without special provisions.
• How many of these contracts will not make the June 30th deadline? Anybody want to guess?
Now, take that number and add the balance of the 67 Florida counties and then add the number of contracts that will not close in 51 other states in the country.
WE COULD SEE AVAILABLE INVENTORY INCREASE BY A MINIMUM OF 30% AND FORECLOSURES INCREASE BY NEARLY THE SAME.
Could this have been predicted? Without a doubt!!! Every real estate blog & magazine article has commented on the bureaucratic nightmare involved in getting short sales closed. Did anyone really believe that a short sale contract initiated on April 30th would close by June 30th? No, but I’ll bet a large percentage of these contract offers were submitted many, many months ago.
The economic recourse will cause a domino effect felt down the chain, from the Realtor®, the mortgage broker and the closing company, all of which depend on that closing as their source of income. It will be reflected in future statistics on spending ability and will create a reversal of economic recovery nationwide.
Without a doubt buyers will be heartbroken, some even mad and looking for someone to blame. But who is to blame? Has someone not fulfilled their due diligence? Why hasn’t Congress taken note of this problem and created a conditional extension? Or was the response to the tax credit larger than expected and the budget been depleted and funds dried up? We were never told that the offer was on a first come, first serve basis. I guess Congress can giveth and Congress can taketh away.
Maybe I should look at the bright side. My leasing division should be in high demand (unless all my managed properties have been foreclosed upon)!!
Claire Schwarz, GRI
REALTOR®-Broker/President
Claire Schwartz & Associates, LLC
Orlando, Florida
[...] Tax Loopholes Act of 2010 is posted on either GovTrack or OpenCongress, I’ll note it here. Call it meddling or pitching in; it’s semantics – you’re trying to change the rules, and frankly, that’s [...]