Downtown San Diego Condos: Clock is Ticking Down for Homebuyer Credit

The clock is ticking down for usage of the $8000 homebuyer credit. You must have your escrow closed by November 30, 2009. That gives you about 90 days plus or minus to get this taken care of in a timely manner.

This credit has been very helpful in getting fence sitting buyers to make a decision. The combination of lower prices, the low low interest rates, and now this first-time homebuyer credit offer one of the best opportunities to purchase that I have seen in a long time. Not only have we had Downtown San Diego condo buyers purchase using the credit, but we have also seen our other San Diego buyers use this advantageous tool.

Although it seems that 90+ days is more than enough time to complete your purchase, this timeframe can be deceiving. There are a myriad of things that can go wrong and you need to be prepared. Typically when you make an offer to purchase the escrow period can be 30-45 days. Sooner if the seller and you are prepared to close. However, if you are offering on a short-sale property, you are going to an alternate universe where time has no connection to the real world. I am sure you have read horror stories about buyers who have waited 6 months only to find out their closing isn't closing.

If you are planning to use the First-time Homebuyer Credit before its expiration date, then take into consideration a few suggestions such as:

Try to stay away from short sales. However, if you find the most perfect property you just have to have, try to make sure the short sale is at least approved. If you at least have an approval, you have a chance at a timely closing. Notice I make the disclaimer "chance".

Make sure your financing is in place. Preapproval from your lender is critical. Not just Prequalification, but preapproval. That way you will only be dependent on the appraisal and physical inspection. Get the appraisal done as soon as you can because we are starting to see appraisals come in low and then you need to renegotiate with the owner to see if they will reduce the price to appraised value. There are no lenders who will give you money for more than their appraiser says the property is worth. It won't happen. Sometimes the seller will reduce the price and sometimes they won't.

Try to find out how your lender will fund the loan. In other words, some lenders require all conditions to be satisfied prior to the drawing of loan documents. They won't budge until they have everything they need. In reality, although this can be a pain in a painful place, you at least know you have a good chance of your loan funding and closing. Conditions after you sign documents with this type lender tend to be pretty simple.

If your lender reviews and gives conditions after you sign your loan documents, make sure you give yourself enough time to fulfill conditions. I have seen some really weird and off the wall conditions in this current marketplace. If a new loan funder comes in, then sometimes you start all over with a set of different conditions. Just make sure you have given yourself enough time for any unforseen conditions. Lenders will even call on the morning of funding to verify your employment or review your credit report. All lenders have become more and more picky in this marketplace.

The tax credit is an important part of benefits right now for first-time homebuyers, but don't make a decision due soley on the tax credit. Take away the credit and ask yourself, "Would I still want to purchase?" If you can answer yourself yes, then get cracking. If you hestitate, then ask yourself if you are buying because you want a place to live or you are buying because you want to be part of the "first-time buyer herd."

By Sharyn & Victoria Crown, Coronado and Downtown San Diego real estate brokers

This is part of a series of articles entitled, New Condos, Downtown San Diego Style