Stephanie Armour
USA Today
A sign announces a residential home sale is pending in the Boston suburb of Framingham, Mass. A rush of consumers aiming to meet a deadline to qualify for a federal tax credit pushed the number of buyers signing contracts to purchase homes higher. By Bill Sikes, AP
Thousands of pending home sales may be in jeopardy unless Congress extends the June 30 deadline for buyers to close on their deals and claim a tax credit.
The Senate on Wednesday approved a three-month extension, giving buyers until Sept. 30 to close, but it’s attached to another bill that still has to be passed by the House.
The extension would apply only to buyers that met the April 30 deadline to have signed purchase contracts in hand.
The tax credit is worth up to $6,500 for repeat buyers and up to $8,000 for first-time buyers.
Many pending deals are in danger of not closing by June 30 because of delays that aren’t the buyers’ fault. Some appraisals are taking longer to complete, and some lenders have been overwhelmed by a crush of mortgage applications that landed before the tax credit expired April 30.
Up to 180,000 buyers who were hoping to close by June 30 and get the tax credit are likely to miss the deadline, according to the National Association of Realtors (NAR).
“We are hopeful,” says Paul Bishop, vice president of research with NAR. “We’ve heard a lot of concern from Realtors out there. There seems to be a sense of fairness. The tax credit was essentially promised” to those buyers.
But some Realtors say even if a three-month extension is granted, that still won’t be enough time for buyers pursuing houses through short sales, which can take many months to close.
“How are you going to close a short sale in two months?” says Edward Goldfarb, a Realtor with Keller Williams in Fort Lauderdale. “Hundreds of people are not going to close and are going to lose their tax credit. September is not any better. A short sale can take a year and a half.”
Another concern is that buyers who face losing the tax credit could pull out of pending deals altogether. Any extension must be passed this week, or buyers will start canceling deals next week, before the deadline hits, says Richard Smith, president and CEO of Realogy, parent company of Century 21, ERA, Coldwell Banker and Sotheby’s International Realty.
“We’re concerned, as many people are, that this will force people to cancel their contracts,” Smith says.
Brian Bonime, 33, has a contract on a home in Margate, Fla., but is worried the short sale won’t close in time to get the $8,000 tax credit he was counting on.
“It’ll put a dent in things financially,” says Bonime, who works in management at a supermarket. The sellers “had brand new appliances they’re taking with them, and we were going to get the money now so we can get appliances.”