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The final countdown has started on the June 30 deadline for the home buyer federal tax credit. New home buyers who fail to close on Wednesday stand to lose up to $8,000. For many new home buyers, particularly first-timers, loss of the federal income tax credit could spell financial disaster. Many buyers are counting on the credit to make their home purchase affordable and may be forced to back out of their contracts without it. Buyers and their real estate agents are hoping the U.S. House of Representatives follows the Senate's lead in extending the closing deadline to September 30. The deadline extension, which would also require presidential approval, is backed by the National Association of Realtors, the American Land Title Association and other realty trade groups.

In an interesting turn of events, buyers who missed the April 30 contract deadline to qualify for the income tax credit may actually come out ahead of those who filed promptly. With home buyers harder to find since the credit expired, realty efforts to goose the housing market coupled with declining interest rates may wind up benefiting procrastinators. Since the tax credit expired on April 30, three things have happened that could pay those who delayed:

• Many sellers have been forced to lower asking prices to attract buyers.
• Builders and real estate companies are offering promotions valued at more than the credit.
• Mortgage interest rates have declined from 5.125% in April to 4.75%, enough to save home buyers more than the value of the credit over the life of their loan.

Of course, whether home buyers benefit from buying in the post-credit market depends largely on market and price. As always, buyers will find better deals in stagnant housing markets. Buyers who appear to be benefiting the most in the post-credit market are those shopping for homes in the under $200,000 price range. Homes at this price point were snapped up fast this spring by first-time buyers anxious to take advantage of the tax credit. The lag in home sales since April 30 has forced many buyers to drop their asking price by as much as 30%. Coupled with the traditional June drop in housing prices as families scramble to move before the next school year starts in August, post-credit home buyers may be glad they waited.

There has been a lot of talk about how we may see an extension of the homebuyer tax credit. Because a lot of people waited until the tax credit was nearly over to buy, many of these loans are caught in a backlog. Those who managed to sign contracts by the last day of April will have to the last day of June to see to it that they close in order to receive the tax credit. However, as you well know, making sure the deals close in time does not depend only on the buyer.

As you are probably aware, a number of these sales that were made just as the deadline was looming were short sales. These kinds of sales are more complicated and require more time to complete.

Lenders have been working very hard to process documents for those who signed on before the tax credit deadline. As a realtor, you can encourage your clients to hand in any requested documentation as soon as possible in order to avoid any delays in processing. However, there is discussion of moving the deadline up to the send of September, allowing three more months for transaction to be finalized.

Some in the industry are concerned, however, that extending the tax credit will serve as an added incentive to the dishonest, since there have already been reports of people attempting to backdate documents to make it appear as if they had closed by April 30.

For those who think that the government is too big or too slow to notice, Uncle Sam
should not be underestimated. The IRS could easily ask for supporting documents and records that will be hard to fake.

Plus, since extending the tax credit to all who should receive it legitimately will not come cheap, you can be certain that the government it not going to look kindly on fraud in connection to the tax credit.