When the federal homebuyer tax credits expire at the end of the week, Coldwell Banker Real Estate will launch its own program that is intended to stimulate sales, the Realogy subsidiary announced Monday.
Under the company’s Buyer Bonus Sales Event promotion, sellers can voluntarily sign up to offer buyers a credit of 3 percent — up to a maximum $8,000 — off the home’s accepted offer price, to be applied toward the buyer’s closing costs.
The $8,000 cap on the closing-costs credit is equal to the amount of the first-time homebuyer’s tax credit that expires on April 30 (a federal tax credit of up to $6,500 is available for repeat buyers).
"As the credit expires, Coldwell Banker Real Estate is encouraging buyers who haven’t found a home yet to continue looking, while bringing a new audience of homebuyers who were unable to qualify for the tax credit into the market. We are confident that this private-sector solution will represent a significant step toward continued recovery of the housing market," said Jim Gillespie, the company’s CEO, in a statement.
According to a recent survey, the company said, 34 percent of the company’s agents and brokers said the federal tax credit was the main reason their clients were looking for a home, while 28 percent said that the government credits’ limitations would keep some potential buyers out of the market.
Both the National Association of Realtors and the National Association of Home Builders credited the federal tax credit for a March surge in existing-home and new home sales.
Coldwell Banker’s promotion is open to all buyers of the company’s participating listings, while the federal tax credits restrict who qualifies by income, the price of the home (can’t exceed $800,000), and whether the buyer has owned a primary residence (a first-timer can’t have owned one during the three years up to the date of purchase).
"This is a private-sector solution as opposed to a public-sector solution. It’s a win-win for everybody (because it’s) not a government program where we’re using taxpayers’ dollars," Gillespie told Inman News.
As of May 1, buyers will be able to check a box on Coldwell Banker’s website to see only listings in which the seller offers the 3 percent closing-cost credit. The company also plans to promote the event through national television commercials, yard signs, and online advertising.
Sellers who participate in the promotion will thus gain greater exposure for their listings, the company said. The company’s website has about 300,000 total listings.
Buyers must have signed a sales contract by July 31 to qualify for the promotion. Sellers can sign up to participate in the event anytime between May 1 and July 31.
Gillespie said he expects at least 30,000 participants in the "Buyer Bonus" event, based on participation from the company’s 10-day October sales event, which he said drew 32,000 participants. Sellers participating in that earlier program agreed to drop their asking price by up to 10 percent.
The practice of closing-cost credits is not uncommon in real estate transactions, though there are typically regional differences in how these costs are paid.
Closing-cost credits can in some cases be more advantageous to buyers than a simple home-price reduction of the same amount, according to Inman News columnist Jack Guttentag, as it can mean that a buyer is not required to bring as much cash to the closing table.
In a separate release, the National Association of Home Builders reminded armed service members that they may have an extra year to claim the federal homebuyer tax credits if they were on official extended duty for 90 days or more anytime between Jan. 1, 2009, and April 30, 2010.
"Congress recognized that many service members may have missed out on the homebuyer tax credit due to being posted overseas," said Bob Jones, NAHB’s chairman, in a statement. "It is only fitting that they be given another year to take advantage of this opportunity in appreciation of the sacrifices they have made serving our country."
To qualify, homebuyers must be uniformed members of the United States military, Foreign Service members or intelligence employees.
"The rule that requires buyers to repay the credit if they move out of their home within three years has also been waived for qualified service members if they have to sell their home due to receiving government orders for extended duty service," the association said.
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