November 30 is closer than you think

The first time homebuyer tax credit is rapidly coming to an end (unless there’s an extension or expansion, of course).  Many of you have been concentrating on finding buyers and negotiating agreements so you can set settlements that will occur before the November 30 deadline.

As you’re doing that, have you looked at the calendar for November? The 26th is Thanksgiving, which makes the 30th a Monday. I don’t sell real estate for a living, but it makes me nervous to think about the logistics involved in setting a settlement for the Monday after a traditional 4-day holiday weekend especially if the buyer risks losing $8,000 in a delayed settlement.

At the recent PAR Business Meetings one agent said his broker had been asked by a buyer’s attorney to sign an agreement that the broker would give the buyer $8,000 if his closing didn’t occur by November 30.  Ouch.  With so many things that could go wrong, would you feel comfortable guaranteeing a closing date with an $8,000 penalty staring you in the face?

On the other side of that coin, another agent suggested that he might want sellers to agree in advance that they would delay a scheduled closing if his buyer stood to benefit from a potential increase in the tax credit.  Sounds like a good idea in theory, unless a delay means that the seller now couldn’t close on their new home.

Some suggestions as we near the deadline:

• Unless you absolutely have to, don’t schedule closings for November 30.  Seriously…why take the risk?  I know that closing at the end of the month saves your buyer clients a little bit of money but balance that against the chance that they could lose the full $8,000 credit and blame you for it.
• Keep your eyes and ears open for potential changes.  If there are changes to the credit you’ll want to know as soon as possible so you can advise your clients about how to take advantage of them.
• Refresh yourself on PAR forms that could help a transaction that sees delays. Consider using the Change of Terms Addendum (Form CTA) if you need to extend the settlement date – especially if there are other changes being made at the same time.  If there’s a need for a buyer to move in to his new home early use the Pre-Settlement Possession Addendum (Form PRE), or you can use the Post-Settlement Possession Addendum (Form POS) if a seller needs to stay put after the closing on his current property.
• Talk to your clients (both buyers and sellers) in advance about their options as the deadline nears.  The domino effect could be pretty big if whole groups of buyers or sellers suddenly want to start delaying or moving up settlements.

So…what are you doing to prepare your clients for the November 30 deadline?

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Tags: first time homebuyers, forms, settlement, standard forms, tax credit

This entry was posted on Monday, September 28th, 2009 at 7:10 am and is filed under Industry News, Legal Issues. You can follow any responses to this entry through the RSS 2.0 feed.