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Sherri Richards, Published March 31 2010

Homebuyer tax credit set to expire

Potential homebuyers who want to take advantage of federal tax incentives better start hitting the open houses.

In order to take advantage of the $8,000 first-time homebuyer tax credit, or the $6,500 tax credit available to certain repeat homebuyers, taxpayers must have a valid contract signed by April 30. They must close on the house by June 30.

“I would not wait any longer. They need to get going,” said Diane Nordhougen, Park Co. Realty sales manager. “We don’t want them to settle on the house just to take advantage of the credit. You want to find that dream home.

“I would tell people they should have an offer in, gosh, no later than the 15th of April. You can still get it through, but you’ll be pushing it,” she said. “If you put in an offer on a foreclosure or short sale, that’s going to take even longer.”

Last-minute sales will put a time crunch on those in the local real estate market – such as Realtors, appraisers and home inspectors – to complete the deals by the set deadlines.

“Our market is overwhelming right now. We’re very busy,” Nordhougen said.

The tax credit also applies to new construction, though it’s unlikely a builder would guarantee a June 30 completion of a home that hasn’t been started yet, said Jason Eid, president of Eid-Co Buildings. His company and other builders are offering promotions on new homes that are under construction.

More people have been responding to the first-time buyer credit than the $6,500 incentive for so-called “move-up buyers” – homeowners who’ve been in their home for at least five years.

It seems that incentive has not been enough to spur people to sell their home and buy a new one, though it has caused some to move up their timetable if they were already considering a move, said Robb Johnson, broker with RE/MAX Realty 1 in Fargo.

But the incentives have been well-received locally, real estate agents and lenders say.

Kevin Hanson, senior vice president, residential lending manager for Gate City Bank, said he’s been seeing a lot of preapprovals for mortgages. “People who would be thinking about buying in a year thinking maybe I should do it now,” Hanson said.

“The overall activity is a lot stronger for this time of year than it would be,” he said. “It’s definitely got their interest.”

Tyler Jacobs, a 25-year-old student at Minnesota State University Moorhead who also does landscaping, put in an offer on a three-bedroom twin home in south Fargo on Monday. He’s buying the house with his cousin, Sara Gaulrapp. He said both are ready to get out of apartments, and called the incentive an “added bonus.”

“We probably would have thought about it without this, but it just seemed like a great time to get into it with that added incentive,” Jacobs said.

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Readers can reach Forum reporter Sherri Richards at (701) 241-5556