Home buyers get the short end of the stick?
The bill to extend the closing time from June 30th to September 30th for the buyers who properly contracted by April 30th to be eligible for their $6,500 or $8,000 tax credit appears today to have died. After what appeared to be a promising passage of the bill just last week after NAR’s urging of the government to aide buyers currently in the transaction, the “American Jobs and Closing Tax Loopholes Act” aka HR4213 failed to pass.
Given that the House and Senate observe a recess after July 2nd and buyers only have through June 30th to close on homes they contracted on in April, there is little to no hope that they will come up with an alternative for these buyers. These buyers have simply gotten the short end of the stick.
One of the greatest rights we have in this country is free speech, which most interpret as the right of
free speech pointing fingers. In that vein, some blame Republicans, others blame Democrats, others blame Sarah Palin and others jeer at Pelosi- all four of whom are not likely the culprit, but the fingers are flying today as HR4213 appears to have died.
Because the tax extension got crammed into a bill alongside many other extensions, such as the contentious extension of unemployment benefits including COBRA and made amendments to Medicare coverage and obscure measures such as railroad maintenance and because the cumulative cost of all of the bill’s extensions would hit $141 billion Uncle Sam would have to cough up, homeowners that legitmately should receive their tax credit will not… not because they didn’t legitimately contract by the deadline of April 30th, but because the credit lenders can’t close a contract in 60 days in most cases in the current climate.
So whose fault is it?
Who is to blame? In my opinion, the culprit is good ol’ Charlie Rangel who sponsored the bill and lumped everything together and watched as it got spun out of control and turned into a “tax hike” bill thanks to talking points. To be fair, I have a pre-existing condition called “ihaterangel-itis” and it’s not really his fault, it’s the way the system works (lumping amendments together), but control over the message was lost early on and that is the fault of someone so high profile who has the ear of the media.
My inner Republican scoffs at such massive spending, but the economy was given a boost this spring based on this spending and now because of poor branding will fail, so my inner Democrat is frustrated that the talking heads have perverted the bill so intensely that it’s now a lose/lose situation regardless.
Phoenix agent Jay Thompson said, “My guess, and we’re talking pure speculation here, is the unemployment extension provisions of this bill will be “spun off” into a separate bill. What will happen with the homebuyer tax credit closing extension? I won’t even hazard a guess… Congress could, in theory, pass something with a retroactive date to extend the credit. Or, the credit deadline could go on as planned.”
Forbes reporter Robert Green agrees with the sentiment that talking points have influenced the death of this bill. Green said, “This Congress has taken re-branding to heart too. It’s the ugly side of politics, turning garbage into gold with the right name and campaign to fool the voting public. Did this happen with HR 4213? It went from being labeled a “tax extenders” bill to a “tax hike” bill. Tax extenders implies extending tax breaks and credits to spur the economy. Then the bill was titled “Closing Tax Loopholes.” Selling a business for a capital gain is not a loophole.”
Regardless of our opinions and whether Rangel, the evil Republicans, the San Francisco Democrats or the devil himself is at fault, the bottom lines is that Congress couldn’t pull it together and home buyers are getting the rug pulled out from underneath them. That is the unfortunate part.
Distrust of Realtors, comin’ right up…
Of secondary importance, this will surely impact the real estate industry– I think it will tragically set the trust factor back for our industry just as we had finally made progress toward an environment where agents aren’t seen as crooks. Consumers won’t understand that their not getting the credit (or the horror stories about their friends not getting the credit, causing their dog to die and for them to contract herpes AND the clap) is not the fault of the individual agents, the brokers, the National Association of Realtors or the industry for that matter.
Regardless of your political leanings and whether or not you support tax credits in the first place, the agents on the street will feel ripples of frustration as a result of a tax credit that thousands bought their home contingent upon but will never see. This will leave a pock mark in the face of real estate and no amount of foundation or rouge will cover it… and it’s not even the industry who is at fault.
CC Licensed image courtesy of Mike Renlund via Flickr.com.