If you missed the April 30 homebuyer tax credit deadline without snagging a house, pat yourself on the back: You just may turn out to be one of the lucky ones.
While the credit is now history, savvy buyers may be able to make up that money — and then some — through some shrewd house hunting over the next two months, industry experts say.
“Savvy buyers can put their feet back into the market,” says Rona Fischman, principal broker at 4 Buyers Real Estate in Cambridge, Mass. “It will be more sane and less of a sellers’ market.”
Thanks to the tax credit, buyers came into the market over the past year who otherwise might have waited on the sidelines, says Olivier Garret, chief executive officer of Casey Research in Stowe, Vt.
Because the credit pulled demand forward, competition among buyers is set to plummet just as the spring market traditionally peaks in May and June. That could create bargains for buyers.
Several factors may put downward pressure on home prices and increase seller desperation over the next few months, according to some economists and market observers.
Home mortgage rates may climb now that the Federal Reserve has ended its campaign of buying up $1.25 trillion in mortgage-backed securities. In addition, inventory levels may swell as more foreclosures and short sales come onto the market.
All of these factors could cause demand for homes to soften. Garret is predicting another step down in home prices across the U.S. by year end.
“Nationwide, prices are going to go back down,” Garret says. “We anticipate a decline in pricing in 2010 of 10 percent.”
For buyers who are employed and not burdened by debt issues, the weeks ahead may turn out to be a great period for bargain hunting. Real estate agents and housing market experts offer the following tips for buyers who want to take advantage of the new sweet spot in the market:
Maximize seller desperation. Sellers may be ready to make a deal, especially if they thought they had an agreement lined up before the tax-credit deadline, only to see it fall through.
Careful reading of MLS records may offer insights into whether a seller is suffering from such post-tax credit blues. For example, the property’s listing history might show it was placed under agreement in the weeks leading up to the expiration of the tax credit, only to be put up for sale again later. A broker can be especially helpful in uncovering such clues.
“The seller is probably going to be more motivated after suffering a disappointment,” says Barry Nystedt, a board member and former president of the Avondale, Ariz.-based National Association of Exclusive Buyer Agents.
Practice psychological warfare. Sellers determined to hold out for a higher price may require some subtle reminders about the true state of the market, says Mitch Ribak, broker-owner of eHomes Realty Network and Tropical Realty in Suntree, Fla.
In a bid to get some sellers to move, Ribak has reminded them the tax credit won’t be coming back and the competition will only mount as foreclosures roll onto the market.
If all else fails, there’s always the direct approach. He suggests shoppers say something such as, “I’ve seen five other properties just like this. That’s my final offer.”
“With so many homes on the market, (homebuyers) can really play hardball,” he says.
Be choosy but open-minded. Homebuyers may not find the range of selection they expect in today’s market. For starters, the surge of buying that took place before the tax credit deadline may have put a temporary dent in your local market’s inventory. Also, new homes coming onto the market are more likely to be foreclosures and short sales.
There are good homes out there, though some may be diamonds in the rough. The key is figuring out what is a good bet and what’s not.
Fischman recalls taking one buyer to a house with a stuffed, 7-foot-tall grizzly bear standing in the entryway. While it was downright scary, it was a problem the buyer fixed easily after closing on the home.