Tax Credit or Dream Home...What would you do?

Asked by Heather Humphries, Lakeville, MN Wed Mar 24, 2010

So, the April 30th deadline for the first-time home buyer's tax credit is rapidly approaching. The home that is "the one" turned over to the bank on February 5 but has yet to be listed on the MLS for sale. Nothing else thats currently on the market turns my crank. This will be my first home but it will be a home we'll be in for a long long time. If I wait there is always the risk that I will be outbid. Would you ditch hopes for the home to be listed and settle for something else or hold out for the home you've already fallen in love with and risk losing $8,000 in valuable tax credits? Any thoughts would be appreciated.

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Tim Honeycutt, Home Buyer, Bloomfield, NJ
Thu Mar 25, 2010
To me, buying any house because of the 8K Tax credit is like buying some nasty cereal that I won’t eat because I have a “50 cents off” coupon. I lucked out in the fact that thanks to the tax credit passed in November 2009 I do qualify, but my purchase was not based on getting that tax credit. So take your time, find the house that is going to fit your needs for the next 10 or so years and hope that the Congress finds the will to extend the tax credit.

In the mean time, take a bit of time to read a lot of what Trulia has to offer. I know myself; I read much of what Dan Chase has to offer. Though I do disagree with his final verdict on buying now as opposed to two or three years down the road, his research and opinions did help me to finally decide that now is a good time to buy for me.
2 votes
Sherri Sherpy, , Saint Paul, MN
Wed Mar 24, 2010
Hi Heather,

Just my opinion...But, I would never buy a home or settle for something less just for the tax credit. That money will come and go very quickly. Your home, as you stated will be something you have for a long, long time. Your mortgage is something you will have for a long, long time. The $8k is "peanuts" compared to a 30 year mortgage.

Granted, you may be outbid on your dream home if it gets listed, but there are others out there. Just don't settle. Best wishes to you!
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1 vote
Mark Claesse…, Agent, Coon Rapids, MN
Tue Apr 6, 2010

I see you have received some great advice here and I agree that it's not worth the $8000 to purchase the "dream home" of your choice. I would, however, say that even though the vast majority of sellers that have lived in a home for 15 0r 20 years don't say, "Honey, can you just imagine what we'd have if we had raised the kids in that other home in 1234 Main Street that we missed?" . . . . . I also realize that too many buyers think they found "the one". And it's just like love and life, there is no such thing as "the one", there are many. And you are doing the right thing by continuing looking out there. You may find yourself just as happy with another one at the last minute.

But one last shot . . . and that is that although you tried calling the attorneys, etc. there are other avenues that your agent should have tried to help you because you won't be allowed to go that deep. A couple months back I helped a buyer (not even my buyer) find a way to figure out what you are trying to do. The short sale did not work and the home went into foreclosure. They kept calling me because their agent was truly not very helpful and not willing to work. So I made two phone calls and found the new listing agent-to-be and found out what the new listing price would be and basically saved them a lot of trauma and they purchased the house for $15,000 less than what it was listed for before the foreclosure and they didn't even have to wait until it hit the market. For ethical reasons I won't share any further, but ask your agent to step outside the box and I hope to see on here that they made 2-3 phone calls and you are going to be able to get that house!
0 votes
Heather Hump…, Home Buyer, Lakeville, MN
Tue Mar 30, 2010
FYI, I contacted the law firm who handled the sheriff's sale of the house and they..... well..... they were lawyers, kinda snotty. No new info there. I also went with my realtor to view 7 homes of similar size, ammenities, and location. None of them compare, so I wait. I'm confident it'll get listed soon so I'm just going to have to ride it out. Thank you to everyone for your answers, its what I knew deep down, that the house is more important than the tax credit. I appreciate your insights. :-)
Heather Humphries
0 votes
Colin Simpson, Agent, Wayzata, MN
Thu Mar 25, 2010
Hi Heather,
Great question.
Your "Dream Home" is just that. The 8K is just a cherry. The sundae is still just as good without it, no?
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0 votes
Brad Anderson, Agent, Maple Grove, MN
Thu Mar 25, 2010
Heather, wait for the home you like. The $8,000 is nice, but shouldn't be your deciding factor, the home should be.
0 votes
Don Tepper, Agent, Burke, VA
Thu Mar 25, 2010
Don't make your decision on the basis of the $8,000 tax credit. I really like Tim's answer; it's a great analogy.

Recognize, too, that, eventually, there will be other homes on the market that you'll like. Maybe a month from now. Maybe 6 months from now. And you could be outbid on the one that you like. And you could be outbid on one of the others. It's all a game of chance.

What we do know is that an $8,000 tax credit on a property you don't like really isn't worth it. We also know that if you overpay on a purchase, then the value of the $8,000 tax credit is substantially reduced--so don't buy just for the sake of buying something. So: Don't buy something you don't want. And don't buy because you feel like you're pressured into buying, and thus risk overpaying.

Wait for a home that you really like. You've already found one. Keep an eye on it. In addition, work with your Realtor to see if any other homes that appeal to you come on the market by April 30. Once you find a home you really like and that's available--whether it's the one REO or some other property--then make an offer. Make it a solid offer, but even then: Know the comps, so you don't overpay.

Keep your focus on finding a home that works for you at a good price. Don't get distracted by temporary tax credits. Don't get distracted by uncertainties. ("What if I make an offer on a home and I still don't get it?") Focus on the goal.

Hope that helps.
0 votes
Joel Friday, Agent, Coon Rapids, MN
Thu Mar 25, 2010
The thing to remember is you have to under contract by 4-30-10 and close by 6-30-10, so there is a possibility that an abandoned home will be on the market in 6 weeks. This is cutting it close, so have a few options lined up in your mind and be ready to scramble in the last few days.

There will be other homes like this one eventually, so patience can be the key if the right home is that important to you. There are also city and county funds available to help you restore foreclosed homes that can amount to more than the $8000. Be sure to check with the city and county redevelopment departments for these options.

Dream on!
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0 votes
Bill Eckler, Agent, Venice, FL
Thu Mar 25, 2010

It's our opinion that the only mistake you could make is to stop looking and considering other options. This is not to say we are support abandoning your "dream home" hopes but to keep your eyes open for other opportunities.

If you can remain objective, there may be an even better opportunity waiting for you to find it.

Hold onto your dream.....remain open.....keep'll recognize it if you find it!

Best wishes,
The Eckler Team
0 votes
Susan Hoffla…, Agent, Shoreview, MN
Thu Mar 25, 2010
Hi, Heather!
I think your logic is sound. What some answerers failed to grasp is that your fear is you may wait, make a bid on the place, and then lose it anyway. Which would mean, not only did you lose the "dream house", but you also lost out on the tax credit because you waited too long.

I think you should try to pursue who the agent is by finding that out through the law firm that represented the bank. Call the county. They can tell you who the law firm/asset manager is on behalf of the bank. From there, you may be able to find out the agent that will be listing the property. Thing is, it's their job to get "best and highest" for their client, the bank. At least you'll have more of an oppotrunity to get answers to your questions about when the house might be coming on the market, etc. That allows you to make a more informed choice. Good luck!
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0 votes
Steele V. Pr…, , Minneapolis, MN
Wed Mar 24, 2010
I've been an REO listing agent for the past seven years. If you are saying the property went out of redemption on Feb 5th, then it should be going onto the market fairly soon. I'm seeing it about 4-6 weeks for the banks to actually list a property in the MLS. Mind you, the agent is already chosen. Not always easy to track them down but the foreclosure attorneys involved might give you the asset managment company handling it who in turn might give you the new listing agent's name and contact info.

You still have until April 30th to get a property under contract and get the first time buyer credit. So you can wait. But as mentioned you will want to keep your eyes open at the same time. There could be something just around the corner coming up that you will love just as much.

Good luck.
0 votes
Dianne Hicks, Agent, Rancho Bernardo, CA
Wed Mar 24, 2010
I would keep looking and make sure that it does not get purchased on the court house steps. Actually, have your Realtor pound the bank, call at least 3 times a week trying to get ahold of the asset manager. I have seen it done, not easy but can happen. this is the best approach to not letting anyone else have a shot at it. They may say we don't do that. Call again, and joke... have you changed your mind yet? Eventually you will wear them down (lol). Make sure your offer is fair market value and you have a shot!!! You have to think outside the box in this market!!! what is the worst that will happen... they say no.

In the meantime... keep looking but I would prefer I house I loved over an $8000 tax credit. It is something that you are in everyday and for years. Isn't that worth $8000 if you really loved that house. Okay... you might not get it, then again you might.

Good Luck!!!
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Gina Schedivy, Agent, Eden Prairie, MN
Wed Mar 24, 2010
Hi Heather. It sounds like the home you have designated as your dream home is going to be sold at an exceptional value once it goes on the market. So, losing on the $8000 tax credit wouldn't be so bad. Although, it probably wouldn't hurt to fully explore the location with the help of a licensed realtor. There just might be a similar property coming on the market that isn't in MLS yet. Realtors often will list homes and withhold them from MLS until the sellers have the last few repairs completed. walls painted or carpet installed. Sometimes realtors network with each other when a property like this is about to come on the market. Brand new properties to MLS don't make it onto Trulia and other websites until a days or sometimes days later. I think it would be prudent to get the latest information from your realtor. Make sure your realtor is doing an auto search for you through MLS with the reverse prospect toggle switched on. This will increase your chances of learning of a similar property to that of your dream home. Even if you don't find a dream home through this route, you can learn a lot about home ownership through showings and making sure you ask your agent lots of questions as she/he is showing you homes. Use your realtor as your advocate. If you don't have a realtor, there are plenty of realtors who would be glad to assist you (including me). When selecting a realtor, make sure he or she is the kind of person who is willing to listen to your needs and answer all of your questions.

Wishing you the best,
Gina Schedivy
Re/Max Results
Plymouth, MN
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0 votes
Dan Chase, Home Buyer, Texas City, TX
Wed Mar 24, 2010
Can you imagine in 15 months you are stuck in a house that is not what you wanted, the free money is gone, and you see the house you like up for sale. How would you like the house you bought instead then?

I am going to almost overwhelm you with things to look at below.

I would not buy a house I hated just to get some money and still have a big mortgage. I would insist on something that would suit me well (even if not ideally) or I would not buy.

First, I would look at the numbers. Does it really make more sense for you to rent or to buy a house?…
Below is a blog showing some reasons why renting at a higher amount could be the better decision that buying would be.…
Why you should consider the cost of gasoline when buying a house.…

The blogs below give an alternative take on what it means to buy now and get the lower interest rates and free money. It could be right or wrong buy is something to really consider.

10 reasons to wait to buy a house and not buy now.…
Do low interest rates really make it the right time to buy a house?…
What will (or could) happen when the free $8,000 goes away. A very different take on things.…

All of the above are things to consider. I can see waiting would be a good idea for several reasons. You can add the reason that what you really want and would be comfortable in will take weeks, perhaps months or a year or more to be available.
0 votes
CCC, Home Owner, San Diego, CA
Wed Mar 24, 2010
Are you sure you qualify for the 8k?

My answer: Dream home. Hopefully you are the winner on the bid once is for sale.


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