If you are a buyer thinking about taking advantage of the home buyer credit in the next few months (first time or current owners looking to move up), here are some things to think about…
1. You’ll need to have a fully signed and accepted contract in place by April 30, 2010. Given that, you most likely want to start looking at homes not much later than the beginning of February. This will give you time to look at enough properties to feel comfortable about the process before you find one you’d like to buy. It will also give you some time to learn the market (ie- what you can get for your money in different towns). If you think that you’d like to buy a property that’s a short sale, I would start looking sooner. In most cases, short sales are taking 3 months or more to be approved by banks. You’ll need more lead time for these types of properties.
2. Realize that there will be competition for properties this spring. Multiple offer situations will occur on homes that show well and are priced correctly. Don’t assume that every town and every property is a Buyer’s Market and that you can put in low ball offers and desperate sellers will accept them. There will be lots of people trying to take advantage of the buyer credit, as it will most likely not be extended again, so realize you’ll be competing against others.
3. If you’re a move-up buyer, have a conversation with a mortgage lender in the next month or so. You’re looking to understand if you need to sell your home in order to buy. If you do have to sell, I’ll be presenting more information related to sellers tomorrow that you’ll need to consider.
4. If you’re not able to get a contract in place by April 30, 2010 in order to take advantage of the credit, it may not be the worst thing in the world. I believe that the market is going to greatly slow after the April deadline, as there will be lots of people rushing to take advantage of the credit if they’re planning on buying this year. Essentially, the normal spring market where we see people make their buying decisions between March through June will be pulled up to April or earlier. There will be a lot fewer people seriously looking after April, so there will be less competition. Fewer buyers for the sellers to work with could mean better negotiation leverage for buyers on some properties.