For our last post we did a synopsis of the $8000 first time buyer and $6500 repeat buyer tax credits, which expire on April 30.
So now you realize you need to get a home under contract by April 30, and close on it before July 1st, and the home of your dreams just happens to be a short sale.
Well, in the immortal words of Dirty Harry, “Do you feel lucky?”
A short sale home is one where the seller owes more than it is worth. When a buyer is secured, negotiations start with the lender or lenders to see if they would be willing to accept less than is owed on the house. From the time the purchase and sale contract is signed until the property closes usually takes a minimum of 120 days, or four months. Quite a few take longer. Very few take less.
So if you’re looking at taking the tax credit and close on a short sale by July 1, you’re taking a serious risk at missing the tax credit if the deal goes long.
Here’s some things to consider:
- Will the short sale price be enough better than a straight sale price to offset the loss of the tax credit?
- Will a straight sale price + the tax credit be a better deal than the short sale by itself?
- How will I feel if I put an offer in on a home and it falls apart after April 30, when I can no longer take advantage of the tax credit?
It’s your money, boss, spend it wisely.