Well, Christmas came a little early for the First Time Home Buyers, and Santa was even More Generous by providing for the Step-Up Buyers too. This new Legislation will provide for a broader base of Home Buyers than it's predecessor. This will allow Home Buyers, who make up to $125,000 (Individually) for the full Tax Benefit (and it will completely phase out to $145,000); for Joint Filers, it will allow you to $225,000 for the full Benefit (and completely phase out by $245,000). This goes for both First Time and Step-Up Home Buyers. The previous Credit only allowed Income Levels up to $75,000 (complete phase out at $90,000) and $150,000 (complete phase out at $170,000).
To Qualify for this Tax Credit, the Home Buyer must be in Contract, no later than April 30th, 2010; and close by June 30th, 2010. Congress did limit the Sales Price of the New Home to $800,000, so any price higher than $800,000 will not qualify. Also, the new Home must be used as a Primary Residence (Second Homes and Investment Properties are NOT eligible). Eligible Participants may file their claim on the new Tax Credit either on their 2009 or 2010 filings.
First Time Home Buyers: Now that Congress has extended the Credit to a much larger base of Buyers (with larger incomes), then you can expect to see more Competition. Already, many First Time Home Buyers have been competing with Investors and other First Time Home Buyers; but now they may be seeing more First Time Home Buyers (with larger pocketbooks) and the Step-Up Buyer potentially moving down (meaning that a current Homeowner may want to downsize) competing against them. In many areas, the Available Inventory has been greatly reduced (in the Los Angeles area, about 50% of the Active Listings were sold over the Summertime; and there have not been many new listings since). This will probably raise the prices even more. The difficult part of this will be getting your appraisal reports to come in value because the Banks are still seeing this Market as a Declining Market. This is how the Appraiser will view the property. They will look at the Sold Comparable Properties, but they have to reduce the value to their formula for a Declining Market. This is similar to when the Property Values were increasing dramatically a few years ago, which many people benefitted with "Built-in" Equity; but now we're in a Declining Market, so it's going the "other" way. By the way, their Tax Credit remains at $8,000). Also, some people may not know this, but the IRS' definition of a First Time Home Buyer is somebody whom has not held Title on a Property for at least 3 years.
Step-Up Home Buyers: This is a perfect time for those who want to Down-size. They can qualify for $6,500 Tax Credit, if they elect to change Primary Residencies. They do not even have to sell their current residence to qualify. In California, this can be great opportunity for people 55 years or older because they can exercise their Prop 90 Right (transfer their current Property Taxes) to their new residences and get a Tax Credit as a Bonus. Obviously, in this scenario, they will need to sell their existing property and the new residence will need to be smaller in size. To qualify for this Tax Credit, the Step-Up Home Buyer will have needed to be living in their current Primary Residence at least 5 out of the last 8 years. This is also great for those who want to Step-Up into a larger home (as long as the sales price doesn't exceed $800,000). For those who wish to Step-Up, then this will be the best time (in my opinion) because you will be catering to the First Time Home Buyers for your current residence, which there will be a lot of competition; and because of this incentive (for the First Time Home Buyers) you won't find as many opportunities to receive the most for your property (in probably for a few more years). Let's face it, once the Tax Credit disappears, there won't be as many motivated buyers out there (the un-motivated buyers will probably be looking for bargains). Of course, I'm not saying that you will get some outrageous offers. I'm suggesting that working with a good Real Estate Agent, whom really knows their Market, will get the most for your property (and this will be that much easier for them to provide that for you).
To read more about the Home Buyer Tax Credit, then check out the IRS' website (or click here), or the Proposition 90 for people over 55 years old in California (here are 2 links: Los Angeles' County Tax Assessor, here or the California Board of Equalization, here).
If you'd like to know your Mortgage Options, then please feel to contact me any time. I may be reached at mike@mikebjork.com or directly at (310) 694-3544.
8 offers in less than a week, selling over it's list price of $724,900! 
