General Area in USA>Question Details

Laura Reilly,  in Shasta County, CA

If the home owner accepts the short sale contract but the lender involved has not, and you opened escrow, would the buyer still qualify for $8,000

Asked by Laura Reilly, Shasta County, CA Wed Apr 14, 2010

tax credit? Even if contract has not technically been accepted by lender?

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Celine F’s answer
Hi Laura,

Depending on the complexity of the deal, your buyer may or may not be able to close in time for the tax credit. I have seen short sales that take as along as a year and that lenders are overwhelmed with short sales and foreclosures to process.

Considering your buyer may have an opportunity to purchase the home at a discounted price that it was not affordable before, your buyer may still end up getting a good deal without the tax credit.

However, with short sales, the time frame window is wide open to anything that could go wrong along the process. Maybe you can show your buyer other homes while he/ she can qualify for financing now.
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1 vote Thank Flag Link Thu Apr 15, 2010
Yes, because you have an "arm's length agreement," meaning that the contract has been signed by the homeowner and the buyer prior to April 30, but the buyer is eligible for the tax credit only if the sale actually closes by June 30, 2010. Hopefully the lender will approve the price offered and the processing of the ss meets the deadline. Hope you have a good attorney followinup with the lender/bank ss mitigation dept. Good luck!
0 votes Thank Flag Link Thu Apr 15, 2010
This is a really good question. It seems that I have seen the answer to this question somewhere. The seller accepts the offer and all is good in the other world. But in the world of the short sale, it is not always so, since the lender does have a say. Even though the lender is not a party to the contract, the binding agreement date is not a binding agreement date until the lender gives their approval. I hope this helps instead of making the waters more muddy.
Denise Bivens, e-PRO
Century21-1st Choice Realtors
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0 votes Thank Flag Link Thu Apr 15, 2010
Hi Laura, good question - made me stop to think about this one - important Under Contract qualification matter that I would advise any buyer to clear with their tax accountant and attorney, but the reminder of the closing date is critical as well. To qualify, let's hope that in the end buyers really do have to close. After all, we are all funding this....

Jeanne Feenick
Unwavering Commitment to Service
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0 votes Thank Flag Link Thu Apr 15, 2010

Don't forget, it must be closed by June 30 2010.

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0 votes Thank Flag Link Wed Apr 14, 2010
Hi Laura,
Good question there.
From my understanding, the lender is not really part of the contract. The Ratified Contract is between the Seller (the homw owner, borrower from bank) and the Buyer, the lender is just 3rd party to approved the sale. So, as long as if the Buyer has Ratified Contract from the Seller of the property dated before 4/30/10 and if the closing occurs before the date of 6/30/10, the Buyer will be qualified for the tax credit of $8,000. And of course, the Buyer must be qualified in the limitation of the tax credit guideline. Hope this helps*_*
0 votes Thank Flag Link Wed Apr 14, 2010
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