Why Buy A Home Now?

Since I have been at HomeGain for over five years and have been studying the real estate market for at least that long, I felt that purchasing a home now would be the optimum situation for me and my family. So, what prompted that decision?

First and foremost, I wanted to take advantage of the $8,000 tax incentive offered by the federal government. Since I qualify as a first time buyer, this incentive would help cover some of the expenses incurred by the purchase. Also, interest rates are currently at an all-time low.

I like the idea of the tax incentive from a purely financial perspective. I feel that it helped motivate a lot of people to buy a home, and extending the deadline for the incentive further spurred on those people who may have been sitting on the fence.

A happy homeowner now, I have to say that it was a bumpy journey with some lessons to be learned and some interesting tales to tell people who are considering buying a home.

Short Sale Disaster

In the beginning, although I knew that short sales could be problematic, I wanted to explore that option. Little did I know what a monumental waste of time it would be.

Of course, I used my HomeGain resources to get started with an agent and search homes for sale online. We spent the first month searching for homes and another three months waiting for a seller's lender to accept our bid. Ultimately, they did, but the deal was derailed because the appraiser said the property was too dangerous to appraise. Apparently, the appraisal industry is having a large effect on transactions not closing as we will see in my next attempt at finding a home.

Another two months later, upon finding another house and waiting for the lender to accept the offer, the appraiser came out the second time, he then mentioned that he was not sure if the siding contained asbestos or not, something he had missed the first time. So, we cancelled our buyer contract and retracted our offer. Six months and nothing accomplished.

Plain Vanilla Real Estate Transaction

My wife found a townhouse she liked that was neither a short sale nor a foreclosure. How refreshing! We dumped our original lender and put an offer on this property. We asked for a minor price reduction and a couple grand in closing costs. The sellers accepted.

Now things started moving on a much different course. We were now dealing with a standard, plain vanilla real estate transaction. There was only one glitch which cost us about a week; the property appraised for less than the amount we bid. Our new lender, someone I would recommend to anyone purchasing a home, was a former FHA appraiser and had a good idea of how much the counter offer should be. We countered and the seller accepted in about a half hour. Within a couple weeks, we had closed.

We are now waiting for our W2s, anxious to apply for the first time home buyer $8,000 tax incentive.

Looking back at last year when we started our search for a home, with the low inventory and the condition of the market here in the East Bay outside of San Francisco, it would have been hard to foresee the troubles of the short sale (and even foreclosure) debacle.

In terms of recovery of the real estate industry and of the economy overall, it is still up in the air as to whether or not this will be effective. Even though you may not like the idea of the federal government further subsidizing home buyers, what would have happened if this incentive did not exist?

The fact that the current iteration of the incentive now includes current homeowners addresses some of the early concerns that the original tax incentive did not encompass as many potential buyers as it should. No plan is perfect, but, based on my home buying story, it lends hope that it will have a positive effect on the market in 2010 and for years to come.

Disclaimer: The foregoing article is not intended to provide legal or tax advice. You should consult with a qualified legal and/or tax professional.