Home buyers race to beat credit deadline
Must complete deal by June 30
With thousands of dollars at stake, homeowners and prospective buyers across Massachusetts are scrambling to close real estate deals in time to beat Wednesday’s deadline for a home buyers tax credit.
Lenders are adding extra staff and some local registries of deeds are postponing vacations, anticipating a rush of lawyers seeking to record home sales for their clients. The National Association of Realtors estimates that as many as 180,000 home buyers across the United States may miss the cut-off date.
Some, realizing they cannot finalize purchases in time, have already backed out of deals. Others are counting on lawmakers in Washington, D.C., to extend the deadline for the federal tax incentive, which was intended to jolt the dormant housing market by enticing prospective buyers with up to $8,000.
“It is crunch time,’’ said Kevin Sears, president of the Massachusetts Association of Realtors and co-owner of Sears Real Estate in Springfield, which has two pending deals in jeopardy. While the majority of buyers will meet the deadline, Sears said, others are frantic.
“They are pulling their hair out,’’ he said. “The $8,000 tax credit is a big deal.’’
The deadline has added pressure to an already busy time of year for lenders and others involved in completing real estate transactions. Adding to the stress, banks tightened lending standards following the subprime mortgage crisis, further stretching out the process.
“The inability of buyers or their closing attorneys to get clear answers from the lenders who are providing financing for the transaction is causing a lot of anxiety,’’ said Jason Kane, owner of Kane Title Services in Plainville.
Boston real estate attorney David Baron said most pending sales from the spring are scheduled to close by the end of June. Baron also cited what he called a “kind of triple whammy’’ — the tax credit’s expiration, historically low mortgage rates, and attractive home prices, all of which have the effect of boosting the volume of sales.
Only first-time home buyers can earn the $8,000 credit, but some current homeowners can qualify for up to $6,500 if they decide to buy a new home. To qualify, all buyers must have signed a contract on a property by April 30 and complete the deal by June 30.
The real estate industry is lobbying Congress to allow buyers until September to file paperwork. Harry Reid, Democrat of Nevada and the Senate majority leader, included the extension in a jobless-aid bill that did not pass Thursday. It could be inserted into another bill next week.
Some local real estate deals already have been called off because of the looming deadline. North End residents D. James Ruccio and Carolyn Saxon said they canceled plans to buy a Dorchester condominium after realizing they couldn’t close in time. Because the unit they wanted was the first of three in a building to sell, they couldn’t obtain financing — the lender required at least half the building to be sold to owner-occupants. Ruccio and Saxon said they were willing to wait for the seller to find additional buyers, if they were compensated for the loss of the credit. “The seller said no,’’ said Saxon. “We walked away.’’
Under the best circumstances, the legal steps required to complete the purchase of a home are time-consuming, typically taking eight to 10 weeks in Massachusetts, according to Sears. In addition to obtaining mortgage approval, the process includes a title search, property inspection, and appraisal.
Also, many pending sales are foreclosures or “short sales,’’ meaning the sale price is less than the mortgage balance. Such transactions are rife with complications that can take time to work out.
Officials at Bank of America Corp., the largest bank in Massachusetts and nationwide, said they have been bulking up on staff and reaching out to buyers to help as many as possible complete home purchases in time to get a tax credit. But “in today’s environment, sometimes conditions are beyond someone’s control,’’ said bank spokesman Terry Francisco.
That lack of control is weighing heavily on some sellers and buyers as the clock ticks toward Wednesday.
Leslie DelMonaco, a real estate agent with Century 21 Realty Team in Leominster, said a couple she is working with are desperately trying to finalize the sale of their condo so they can go forward with the purchase of a new home — all before July 1. But the condo sale is taking longer than expected because of financing delays, and unless the problems are quickly resolved, both sales could fall through.
“They are so angry right now, because they are feeling they’ve done all the things they needed to do,’’ DelMonaco said.
Jenifer B. McKim can be reached at firstname.lastname@example.org.