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Nearly 3,200 Washington state home buyers may lose their tax credit this week. That's just one state's share of the 180,000 U.S. home buyers hanging by a thread onto the latest tax credit. These are not folks trying to buy a home right now, but people who entered into a contract two months ago to buy a home and qualified for the tax credit. Congress has currently set the maximum closing timeline at 2 months, which would end on June 30.
There's an effort under way to have Congress extend this closing deadline, as it doesn't allow for enough time with many sales today being distressed sales, short sales, and bank-owned REO transactions. The extension wouldn't provide a tax credit to any new buyers, just those who signed their purchase contracts before April 30.
What will happen if it's not extended? For most Seattle area transactions, the $8000 is significant, but not an automatic deal-breaker. Home buyers entered into these transactions knowing the timeline that was available, and should have been aware that they may not close in time to receive the credit.
However, buyers may negotiate for a further reduction in price. The seller could grant a price reduction, or the borrower may just walk away. If the buyer's potential loss of defaulting on their contract (losing their earnest money) is less than $8000, it may be an attractive option for some.I'm not suggesting that a buyer should default, as each contract is different and there may be more penalties for a defaulting buyer than just losing their earnest money. ...cont'dRealtor Article
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