Whew! There was definitely a rush for buyers to get that Buyer Tax Credit. An Orland Park townhome that went through several price reductions with little showing activity received its first offer. It wasn’t a bad offer but closing costs were requested and it took my sellers a few days to try to figure out how low they could go. In fact, it didn’t sound like they were going to be able to work with this buyer.
Time lapsed while my sellers were thinking things over and I think the buyer lost confidence in getting the property in time for the tax credit. We gave our acceptance the day before expiration but I think the buyer became too stressed out about the rush to get something in time for the tax credit and she backed out.
Timing is of the Essence
This is something every seller needs to think about, whether there is some kind of financing deadline, credit or whatever. If you take too long to give your answer, the buyer’s excitement can lose steam and they start over-analyzing everything and many walk away. Maybe they go to their property choice #2 or they decide to keep looking.
For a seller to even get an offer in today’s Buyer’s Market, you need to have an idea of how low you can go ahead of time. If you turn this buyer away, there is no guarantee when the next buyer will come around. So many sellers, throughout the 26 years I’ve been a REALTOR, turn away the first offer only to go back to that buyer weeks or months later, and the buyer purchased something else.
The First Offer Is Usually The Best Offer
Your first offer might be the best and highest offer you will receive. In many cases, once the first offer was not accepted, the next offer is even lower, especially in a constantly declining market. I’ve seen it happen with my own sellers and with other sellers that rejected my buyer’s offer. An expensive lesson to learn.
I have sellers of a Tinley Park townhome that the exact thing happened to them. I did not have their listing at the
time, but I brought them an offer. They took days to make a price decision. In the meantime, my buyers lost interest and walked away. They ended up changing their lives completely to the point of not making a purchase at the time.
Fortunately, I ended up listing the Tinley Park townhome and we do have an offer on it (the buyer made the offer in plenty of time for the tax credit) and the sellers are just going to begin searching for their next home. However, since prices have gone down, they are definitely netting less with this contract than they would have had they accepted the first one they received. Fortunately, they fully understand the current market and have worked with me and have done everything I have suggested.
Some Buyers Seemed to be Willing To Buy Anything Just to Get the Credit
I was working with a first-time buyer that could only afford handyman specials in her price range. She was desperately trying to find something to get that credit. She was approved with FHA financing and most of the homes I was showing her would have needed work. Either the sellers or buyer would have had to do this work prior to closing. Some of the homes would have needed a 203K rehab loan.
I finally told this buyer that she shouldn’t rush to purchase something that she might regret just to get an $8,000 tax credit. I was trying to talk her out of making a bad purchase! Could I have twisted her arm to make an offer on the house with the least problems, but a house she wasn’t ecstatic about? Possibly. Instead, I told her to forget about the credit and to try to find something she really loves. I’m not sure she can actually find it in her price range, and I haven’t showed her anything since. But I can sleep at night.
The Lull is Here
The tax credit is over. Things have definitely slowed down since. However, this market lull could benefit buyers more than the credit would have. Sellers are feeling this slowdown with few, if any, showings. Those that are motivated to sell will reduce their prices. Depending on how the market turns out, you might be saving much more than up to an $8,000 tax credit.
Many buyers can now consider looking at short sale listings since that credit expiration date is no longer looming. I had a buyer purchase a short sale Frankfort townhome knowing she might not qualify for the tax credit. But since we only needed the seller to sign the contract since the mortgage holder had no addendums, she was able to qualify and closed yesterday. She is one happy buyer! Got a great deal on a short sale property and the tax credit to boot!
Rates are still low and prices are continuing to drop. Fill out the Automated Home Finder Form to see what is currently out there in your price range and areas of interest.
