Will The Clock Run Out On Home Buyers Getting The Tax Credit?

According to the original legislation, home buyers who want to get that government tax credit had to have signed their sales contract by April 30 and must now close by June 30. As we saw previously, contract activity spiked at the last minute in April and all those home buyers have been hoping to close by the end of June. However, now that we are down to the wire it’s looking a bit dicey for more and more of these buyers as unavoidable delays pop up on their transactions – whether it’s the result of short sales that are taking frustratingly too long to wrap up or other unforeseen delays on normal deals. Believe me I know first hand. And I also worry about the end of the month crunch at the title and mortgage companies – is there enough closing capacity to handle the volume? So what is a buyer to do?

Well, help may be on the way from the same folks that brought you the tax credit in the first place: congress. Three senators (Senate Majority Leader Harry Reid, Johnny Isakson, and Chris Dodd) have introduced a measure to extend the deadline for closing to September 30. However, just to clarify, this would not affect the April 30 deadline for being under contract.

Of course, the NAR (National Association of Realtors) is all over this measure. They’ve already issued a statement and are lobbying congress to pass this:

As the leading advocate for homeownership and housing issues, NAR
commends these Senators for their attentiveness and sensitivity to
thousands of qualified home purchasers, who through no fault of their
own, are not able to meet the closing deadline of June 30 for the
homebuyer tax credit. Now we urge the Senate and the House to act
quickly to pass this legislation and ease the minds and pocketbooks of
these homebuyers.

According to an article on the NAR Web site up to 180,000 home buyers are at risk of not closing by June 30 through no fault of their own. Knowing the NAR, this is probably a very high end estimate, but nevertheless it’s a real issue. Can you imagine if all these buyers walked away from their contracts, forcing these homes back on the market?