Philadelphia-area homebuyers race to close by tax-credit deadline

It was an angst-filled race to the settlement wire, but with just two days to spare Kim Carter closed on a brand-new house in Royersford in time to qualify for a federal tax credit - the very thing that made it easier for her to buy now in the first place.

A repeat buyer who qualified for the maximum $6,500 credit, Carter finalized the deal Monday afternoon on a $220,000 townhouse overlooking the Schuylkill.

For about 180,000 other buyers around the country, however - including 5,800 in Pennsylvania, 4,300 in New Jersey, and 400 in Delaware - things were looking less rosy. Unless the Senate approves a measure passed in the House Tuesday afternoon to extend the June 30 settlement deadline, the tax credits those buyers were counting on will disappear.

The Senate may move on extending the deadline to Sept. 30, "but passage is still not certain," said National Association of Realtors spokesman Walt Molony.

Time has been the enemy for a while, as everything from mortgage lenders overwhelmed by the workload to lapses in the national flood-insurance program seemed to throw obstacles in the way of bringing some houses to settlement by June 30.

New-home builders not only had trouble completing construction, but obtaining certificates of occupancy from municipalities has been difficult too, said Weichert Realtors agent Diane Williams.

Most area real estate offices planned to be busy with closings all through Wednesday.

"Pick a time, and we have a closing," said Debora Weidman-Phillips, manager and associate broker at Long & Foster Realtors' Blue Bell office.

"It hasn't been easy," she said, citing problems with loan paperwork and "the wrong power-of-attorney showing up."

Charles Taylor Sr. of Philadelphia, the would-be owner of a house in Northeast Philadelphia, had a 2 p.m. settlement scheduled at the office Tuesday.

"I was worried about making the deadline [for sales contracts] in April, but I was able to do it," said Taylor, a first-time buyer who will receive the full $8,000 tax credit on his $120,000 house.

Otherwise, he said, "everything else went smoothly," including the closing.

At Weichert's Media office Tuesday, manager Noelle Barbone said: "We have back-to-back closings, so we're getting a bit jammed up."

So much, she said, that Debbie Dougal Giampetro, the settlement-closing officer, "was handling two at one time, twice."

The logjam, and some problems with loan paperwork, delayed Ian DiDonato's 1 p.m. settlement for almost 45 minutes. But as it ended, he wore a big smile as he held up the keys to his $247,500 house on South Smedley Street in Philadelphia.

DiDonato is also a first-time buyer who gets the full $8,000 credit.

Home prices nationwide also seem to have benefited from the tax credit, at least for now. The Standard & Poor's/Case-Shiller Index of prices in 20 metropolitan areas reported Tuesday that prices had increased in April for the first time in seven months, and also reflected year-over-year increases.

Economist Patrick Newport of IHS Global Insight in Lexington, Mass., predicted that the Case-Shiller Index would rise for two or three months, but then start to decline.

"In our view, the housing glut and foreclosures will drive the national Case-Shiller Index down another 6 to 8 percent, with prices bottoming in 2011," Newport said.

Barbone, who has been selling real estate since 1969, said the federal government might come up with another incentive to boost the housing market "sometime after the summer, when they realize there is a lull in buying and something has to be done."

New homeowner Carter said she's happy to have the tax credit, but also "so excited" to put the whole business behind her. When she describes the last six months, it's easy to see why.

Carter's employer, the American Bible Society, transferred her from Pittsburgh to Philadelphia in January. At first, she was unable to sell her home of 13 years, so the society put her up in a hotel.

"I did get an offer for the house, but it was too low, so I rejected it," she said. The buyer, a first-timer, needed a tax credit - the maximum $8,000 - to afford her Pittsburgh place.

Then Carter found her new townhouse, which, because of its rural location, was eligible for a U.S. Department of Agriculture mortgage through the developer, Granor Price Homes of Horsham. (Granor Price provided a $1,500 credit toward closing costs, as well.)

Two days after she signed the sales agreement, though, funds for the USDA mortgage program ran out, threatening both on-time closing and the much-needed tax credit.

"I was in a panic, so I kept an eye on the bill in the House of Representatives and watched the Senate hearings on C-SPAN," she said.

"The housing market is so terrible," Carter said, so she contacted the person whose offer on her Pittsburgh house she had rejected - to renegotiate.

They worked things out for $111,500, with Carter paying $3,500 toward the buyer's closing costs. Granor Price kicked in $2,000, too, because that post-April 30 deal didn't qualify for the tax credit.

After all that, Carter said, "my $6,500 rebate made all the difference in the world."

"I'm absolutely overjoyed. Really."