Clock runs out on home buyer tax credit

Hours before the home buyer tax credits end, Jane Quilling could be found dutifully posting signs and stacking up business cards Friday for a rare lunchtime open house. With a new lower price, the Re/Max Results agent hoped the Brooklyn Park rambler would catch the eye of a buyer scrambling to find home sweet home before the clock struck midnight.

The $8,000 credit for first-time home buyers and $6,500 credit for some repeat buyers expired at 11:59 p.m. Friday. And in the final days leading up to the deadline, Realtors have been glued to the phones, on the roads and never too far from a computer.

Coldwell Banker Burnet agent Eric Redlinger wasn't giving up. On Friday evening, he drove from Maple Grove to Chaska to show first-time homebuyer clients two properties they had seen only online and told the sellers' agents to "be ready." If they like what they see, "we'll get it done at the kitchen table, old-school style," he said.

For the past 36 hours, Christine Benjamin has been scrambling around, setting up housing inspections and revising documents. She said some of the hysteria is unnecessary. "There's a lot of people that don't fully understand what has to be executed," she said. Some agents incorrectly assumed that all contingencies must be removed from an agreement in order for a buyer to qualify for the credit, when in fact a purchase agreement signed by both parties does the trick.

With those behind her, Benjamin, also a Coldwell Banker Burnet agent, moved on to a proposed purchase agreement that came in Friday morning from buyers desperate to get the credit. She doubts they'll come to an agreement in time. "The sellers aren't feeling the same heat. In this particular case, the offer was not necessarily a good offer and so the sellers are saying 'Well, we're in no hurry' and the buyers are begging. ... I think sellers for the first time are in a different seat than they've been in for the past couple of years,'" she said.

Lowball offers were something of a trend on Friday. Edina Realty agent Kevin Sperle received offers on two different listings that he believes were "intentionally low, to squeeze the seller a bit." But his sellers aren't biting either. With interest rates still low and home affordability high, he's advising his sellers to wait.

Meanwhile, motivated sellers were making lowball offers of their own. Re/Max Associates Plus agent Jeff Feldman had two clients racing to beat the tax credit deadline. One was looking at new construction; the other was deciding between two nearly identical townhouses in Eden Prairie.

When Karrie Murnan put in an offer on one of the Eden Prairie townhouses, the rejected seller offered to lower the price and pay closing costs. That better offer prompted the seller of the favored townhouse to sweeten the deal. With two sellers fighting over her dollars, Murnan ended up paying less than she initially offered on the property of her choice.

No credit, new strategies

Realtors are already gearing up for life after the credit. On Thursday, the National Association of Realtors sent an e-mail to members announcing a "What Matters Most" ad campaign that "reminds buyers and sellers that, despite challenges in today's economy, home ownership continues to be the foundation of the American Dream."

Feldman said he wouldn't be surprised to see some agents "reduce the price by $8,000 and in the comments put 'Your tax credit's right here.' We're all trying to think of different strategies that could work."

Coldwell Banker Burnet rolled out an incentive program, effective Saturday, "to try to extend the benefit of the tax credit to the extent that we can," said Leonard MacKinnon, Coldwell Banker Burnet's director of marketing. Sellers will be urged, but not required, to offer a credit at closing to buyers worth up to 3 percent of the purchase price, or a maximum of $8,000. The cost will come out of the seller's profit, not the agent's commission.