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By Adam Van Brimmer, RIS Media

RISMEDIA, November 2, 2009—(MCT)—Local real estate professionals hear a clock ticking, and they’re sure it’s wired to the economy. The federal government’s first-time homebuyer tax credit is scheduled to expire Nov. 30. The credit, part of the Obama administration-backed economic stimulus package, rewards Americans for buying a home by cutting them a check for 10% of the purchase price up to $8,000.

Housing industry insiders fear the tax credit’s expiration will hurt the residential market’s recovery. Analysts attribute close to 20% of home sales nationally this year to buyers eligible for the tax credit, and the National Association of Realtors claims first-time buyers account for 50% of all sales.

While Congress is moving toward extending, expanding or replacing the tax credit, the Senate is expected to vote soon on a bill co-sponsored by Georgia Republican Johnny Isakson that would extend the deadline five months to April 30, 2010, and make the credit available to all new homebuyers, not just to first-timers. The new legislation would extend the $8,000 credit for first-time buyers and create a $6,500 credit for others so long as they have owned a home for at least five consecutive years since 2001.

“I think it is critical that the credit continue in some form,” said Molly Bridges, president of the Savannah Board of Realtors. “Traditionally, the market slows down at the holidays, and it’s important to keep the momentum going. We don’t want a pause.”

The housing credit’s impact is particularly pronounced in the Savannah area. The number of first-time buyers locally is unavailable, but pricing and loan trends indicate they could make up more than 40% of the market. Homes priced under $200,000 have outsold those priced above that number by almost a 2-to-1 margin this year, with homes priced for $100,000 to $149,999- “starter homes”- outpacing all others. And almost half of the houses financed locally this year were done with loans backed by the Federal Housing Administration or the Veterans Administration, which cater to first-time buyers.

A drop in local building permit applications in September offered a glimpse of what a creditless future could look like. Permits tripled in Chatham County during the summer months as builders began construction on homes that could be completed in time to be bought and occupied ahead of the Nov. 30 tax credit deadline. Permit numbers dropped drastically in August and September, a trend the head of the local homebuilders association, Matthew Young, said reflected the industry’s wait-and-see approach to the post-tax credit market. “If they don’t extend” the credit, Young said, “they will wait and see what sales are like after that.”

Analysts opposed to a tax-credit extension question how many of the buyers the $8,000 handout actually coaxed into the market. An economist with the Brookings Institution, a nonprofit public policy organization, estimates 85% of those who have used the credit would have bought a home anyway, given low prices and mortgage rates. Of about 2 million buyers who would make use of the credit were it extended through 2010, 1.6 million would buy even without the credit, the economist estimates.

Local Realtors disagree. “I know personally of plenty of people who have bought just because of the tax credit,” Bridges said. “They were on the fence, worried about the economy and their jobs and not ready to jump in, but the credit pushed them over the edge and got them buying.” The revamped tax credit proposal would be a major infusion for the market, Bridges said. The new legislation would make the credit available to “move-up” buyers- current homeowners looking to sell their homes and buy more expensive residences- and to those with incomes as high as $125,000 a year. “The move-up folks would be more willing to sell their homes at lower prices,” Bridges said. “Everybody would benefit.”

That includes builders, said Fred Williams of Fred Williams Homebuilder Inc.

“Broadening the credit would definitely help,” Williams said. “The lower-price houses were the ones being built with the summer permits. If the credit expands, the builders would build bigger, more expensive homes.”

Copyright (c) 2009, Savannah Morning News, Ga

The first-time homebuyer Federal tax credit for $8000, record-low interest rates, and nationwide median home prices dropping to the lowest point in five years, makes this an enticing time to consider buying a home. By the way, that tax incentive isn’t truly just for first-time buyers — it’s defined as those not having owned a home in the last three years. Research and knowing your options are critical. Check with your tax accountant for more details. Note that the deadline is rapidly approaching to cash-in on this tax incentive, which runs out November 30th.

According to an article in August in the Raleigh News & Observer, 10.8 percent of buyers are motivated to buy due to Federal and state tax incentives. So far only 1.14 million buyers have filed for the credit but many more are expected to file for it on their 2010 returns. However, the National Association of Realtors reports that the first-time homebuyer figure in July was still about 10 percent below the average for the past six years.

There are many aspects to consider when buying your first home. Your price point, location, lifestyle, expert help, mortgage programs, inspections, how quickly you want/need to move, the list goes on. It can seem like an overwhelming process for first-time buyers. In fact, some shy away and continue to rent simply because they don’t know who to turn to or where to begin. Today there are more resources than ever available with just the click of a mouse; however, that can create information overload! But if you take a breath and relax, I’ll sort through some important factors for home buying. And even if you’re a seller, it’s good to review this material because it helps to remind you where first-time buyers’ mindsets are when they make an offer on your home.

Give yourself more time than you think you need. Due to the housing crisis and credit crunch, the mortgage process can take even longer than it did previously. Searching for a home is averaging about 12 weeks while getting the mortgage process wrapped up can take up to 60 days, according to information released by National Association of REALTORS 2008 Profile of Buyers and Sellers.

Give yourself plenty of time to understand how much home you can afford, what kind of loan is most suitable for your needs, and, of course, plenty of time to select the home that fits your lifestyle. First-time homebuyers often don’t have a lot of comparison shopping experience. Frequently they’re just getting started. What is acceptable for a rental is likely different from what first-time buyers expect and accept when purchasing their first home. However, first-time buyers must understand that shopping for a home is akin to shopping for a mate … there are always some compromises that are necessary. If you don’t allow enough time, you’ll find that it will lead to headaches, rushed decisions, and, in the end, you may feel pressured to buy something that you have not had enough time to completely consider—maybe because you have to relocate and start your job.

Never skip an inspection. You simply can’t spot everything that could be wrong with the home. While not all sellers do it, some hire an inspector to inspect the home when they list it on the market. However, the burden of the inspection typically falls on the buyer to pay for it. And the information you receive is invaluable. Hiring a certified inspector to give the home a once-over will help you discover problem areas that your agent can then negotiate for repair work or price adjustment. Also, note that the home inspections (yours and the sellers) may differ; examine both, this way you’ll learn more about your potential home.

Frank Schulte-Ladbeck, a licensed home inspector says that when you get your home inspection be certain to have everything turned on. In one case, “The water valve to the house was turned to almost off. When you turned it on to regular pressure… [the seller] had water spurting out of almost all of the faucets because all of the O-rings, the seals, had all dried so much that they were just allowing water to spill right out of them,” said Schulte-Ladbeck.

Use experts to help prepare. Having a team of experts who can expedite your search by finding the most suitable properties for you will save you endless hours of looking. Also, the right mortgage expert simplifies the loan process. You’ll be guided through the home-buying process instead of becoming overwhelmed by the options, paperwork, and tasks. Using the best specialists can truly make buying your first home a wonderful experience.