As the final two weeks of the homebuyer tax credit tick away, many sellers are playing a game of “chicken” with buyers by refusing to negotiate on price and seeking other concessions, knowing that buyers may not have time to find another home in time to make the tax credit deadline, according to reports from real estate professionals across the country in the popular real estate site, Active Rain.
Some sellers are asking buyers to compromise home inspections or raise prices after credit-driven buyers turn out for open houses.
Real estate agents around the country report a sudden shift in the climate between buyers and sellers. For the past three years, buyers have enjoyed most of the negotiating advantages but now that the tax credit is ending April 30, some sellers are forcing buyers to compromise or risk losing out on a credit that may be worth as much as $8000 to a first time buyer.
‘We seem to have encountered a strange twist now that we are late in April, sellers are taking advantage of the tax credit deadline. They seem to think that buyers will pay a little more these days and overlook obvious material defects in a home because they are getting desperate to get under contract by April 30th,” wrote Lisa Loper of the RE/MAX Realty Group in Harleysville, PA on the popular Active Rain site.
“I have a buyer that has a good offer on an estate sale property and the heirs won’t come down the $10k to get the deal done. Unfortunately I think there are buyers who will settle for a house just to collect the $8k and in 6 months when they realize they may have made the wrong decision who are they going to blame,” responded Terry Schneeman of Comey & Shepherd Realtors in West Chester, Ohio.
Some real estate agents report that sellers who experience a higher number of showings, may decide to hold out for a higher price and others say sellers are trying to reduce the period for a home inspection so that they can find another buyer before the credit expires if the deal falls through.
“We put an offer in for a buyer yesterday; the seller has asked that we reduce the inspection period from 10 days to 7 days. Why? If the deal falls through, he wants time to sell his house again before April 30th. Guess you can’t blame a seller for hedging his bets,” said Lisa Loper.
Responded Ron Rodrigue of Elm-City Home Inspections in Oakland, Maine, “No buyer should take only seven days to do a home inspection. Sellers should not play this game with buyers. The seller can lose the buyer, maybe they don’t care. It’s not good for the seller to play the game of chicken, the buyer will win. We all know it is an artificial market.”
Carla Freund with Fonville Morisey Realty in Cary, NC reports that some buyers have a list of homes and if one doesn’t work, they just go to the next one. “Now that we’re so close to the deadline, they’re concerned about getting a house with inspection problems and the seller not willing to make repairs or an appraisal coming in low and a seller not willing to meet the value. That means both seller and buyer lose because the buyer may not have the opportunity or time to find a back-up home if they have to walk because the seller refuses to make repairs or meet appraised value,” she said.
Not all buyers are losing. “I just watched a seller attempt the game of chicken during inspection negotiations with my customers and they walked away, went out this weekend, had another offer excepted and the deal is better than what they had before. My guess is the seller will be kicking themselves for digging in,” said a California agent.
“I don’t think buyers nor sellers are thinking very clearly! Everyone appears to be a little off the wall!!!” said Kathy Opatka with Re/Max Premier Properties in Ocean City, MD .
“Bottom line the decision to buy or sell now or wait for a better price should not be based on tax credit, unless you are an investor. If your decision is based on fear or greed, chances are it will be wrong. Decisions made influenced by emotions or under pressure hardly ever turned out to be right decisions,” summed up Bill Desai of Ontario, CA.
In order to qualify for the first-time buyer credit up to $8000 or the existing home buyer credit up to $6500 buyers must have their contract on a home accepted by April 30. They then have two months to close, until June 30.
Last fall the pending expiration of the first-time buyer credit caused a spike in sales in October and December, and a fall off after Congress extended and expanded the credit to include existing owners. Reports from markets around the country suggest the existing home buyer credit has not been substantial enough to motivate many buyers, but the first-time buyer credit has continued to have an impact. The March existing homes sales report, due out Thursday April 22, will provide updated data on the impact of the credit on sales.