Tax Credit Closing Extension Passes Senate

Congress acted at the 11th hour today by signing and sending to the President a bill which would extend the closing deadline for the First Time Home Buyer Tax Credit from 6/30/10 to 9/30/10. It is expected that President Barack Obama will sign the bill, thus giving an estimated 180,000 home buyers the benefit of the credit they otherwise would not have have received due to delays in settlement.

See full story here.

June 30, 2010 Homebuyer Tax Credit Closing Deadline has NOT yet been extended

It appears that there is much confusion in our industry and in the media regarding the homebuyer tax credit deadline.

As of today, the June 30, 2010 closing deadline for purchase contracts entered into on or before April 30, 2010 has not been extended.

On June 16, 2010, the Senate passed bill H.R. 4213 (American Jobs and Closing Tax Loopholes Act of 2010) which included a House Amendment to extend the June 30, 2010 closing deadline to September 30, 2010 (see this post). H.R. 4213, however, contains many provisions unrelated to the tax credit deadline and the bill that passed the House is different than the bill that passed the Senate. Thus, Senate and House members are in committee to work through their different versions of this bill. Once a version is agreed upon, the final bill will be presented to President Obama for signing. Only then will we know whether the closing deadline is extended.

We will continue to keep everyone posted on any developments

ALERT: Home-Buyer Tax Credit Extension Passed in Senate

The Senate voted 60-37 today to extend the closing deadline of the home-buyer tax credit from June 30th to September 30th. The bill still needs passage by both chambers of Congress, but if successful will allow home buyers who signed a contract by April 30th to still get the full benefits of the home-buyer tax credit provided they settle by September 30th, 2010. This will be particularly helpful for those buyers who entered into short sale or REO (foreclosed) properties in the waning days of the 4/30 signing deadline, as many of those transactions will not be ready to settle by the end of this month.

The full MarketWatch article can be read here.

UPDATE: This is not effective law, as it has neither passed the House nor been signed by the President. See here for most current status.

Listing Agents: 2 Steps to Avoid Surprises

I recently heard a story of an agent who lost a short sale listing to foreclosure of a lien. He knew it was a short sale, but didn't realize there was another lien which was eventually foreclosed upon. While you can't *make* the seller tell you everything, there are a couple of steps you can take which could prevent surprises - and loss of a listing - before settlement:

1. A net sheet
2. A title search

Net Sheet

Before taking a listing, I would do a “net sheet” for the seller. The simple formula is this:

Approximate sales prices - (commission) - (mortgage payoff) - (other lien payoffs) - (back taxes) - (seller settlement costs) = seller net proceeds.


Obviously you are relying on good faith, cooperation and estimates, but in many cases you can get a sense before you take the listing as to what a sale will net (if anything) and if your "foreclosure radar" needs to be up.


Title Search

Let’s say that you are in a short sale situation – or anywhere close to it (remember, the seller may not realize they are upside down), I would order a title search from your friendly neighborhood title guy.

Why?

While it is the buyer’s job to evidence title (at least in buyer-controlled markets like ours), as listing agent you don’t want to put work into marketing a property the seller will lose rights to own/sell. A title search may cost you/the seller something ($150 maybe?), although it is possible that the buyer will select that title company or buy the search in which case it would cost you nothing.

In the case I heard about, a Home Owner Association (HOA) lien was foreclosed upon, thereby wiping out the mortgage. Had a title search been done in advance, it may have revealed the existence of the lien. If you were aware of it, you could have done some legwork on your own to determine that the HOA was about to foreclose on their interests. You or the seller could have asked them to hold off until settlement, at which case they'd get paid.

Again, these are not fail-proof methods to avoid all pitfalls that come with listing in this environment, but they just could save yours.