It’s all about the next 45 days. The time period between now and April 30th will be very telling. The tax credits are set to expire…for real this time.
Consider what happened at the end of last year, when the tax credits were (supposedly) expiring in November. Leading up to September, the market was down 40%. But things rallied in the Fall, and by the end of ‘09, the market was only down 25%.
Down 25% is not exactly reason to party, but the overall annual absorption increase of 15% during 4Q (typically the sleepiest months of the year) made for a happier holiday than I was expecting.
We can credit some of the rally to the other three most important words in real estate: FEAR OF LOSS. In the case of 4Q ‘09, fear of loss meant fear of losing out on the homebuyers’ tax credit. There was urgency, people didn’t want to miss their chance.
This Spring, fear of loss is back. The clock is ticking. The deadline is looming. If history’s any indication, we’ll see a surge in volume over the next 45 days. We’ll see buyers rushing to sign contracts.
Make sure they’re YOUR contracts. Treat customers like there’s no tomorrow. (There isn’t.) Be attentive and close the deal. After 4/30 there will be fewer buyers, and the ones who show up will be harder sells – to close those deals, you may need to give up $8,000.
GARRISON INSIDER TIP: At Lake Bluff Condominiums in Milwaukee we MATCHED the $8,000 tax credit with every purchase. Take a look at how we packaged the offer. Do this while you still can. Better to spend $8,000 now than to pay the price later when that sale is harder to come by.
Will there be another extension of the tax credits? Not likely. But one thing is certain: if you take on the mindset that this deadline is the real deal, you’ll close more deals.
And if there’s no surge, well, at least we’ll know where we stand. It will mean the market’s not recovering, and that we need to adjust strategies for a tough year ahead.
Either way, knowledge is power, which is why I’m going to enjoy watching the next 45 days unfold. I’ll keep you posted with more tips and news during these exciting times, and always feel free to chime in below.
GB