Friday, April 30, 2010 | 3 a.m.
A federal homebuyer tax credit is set to expire June 30, but a Las Vegas real estate brokerage is participating in a program designed to mimic its effect.
Only those who have a contract signed by April 30 are eligible for the federal tax credit that gives $8,000 for first-time homebuyers and $6,500 for move-up buyers.
That means anyone who hasn’t already found a home won’t be eligible. Realtors aren’t expecting the federal government to extend the credit again.
That’s where Coldwell Banker is stepping in for a program that starts May 1 and runs through July 31.
Coldwell Banker franchises across the county, including Coldwell Banker Premier Realty in Las Vegas, are trying to capitalize on the expiration of the tax credit.
The brokerage won’t be putting up the money. Instead home sellers have the option of participating in the program that offers a credit of 3 percent, up to $8,000, of their home’s purchase price. The contracts must be signed by July 31, and there is no deadline for the closing date.
At a time housing analysts say sales are expected to dampen once the federal credit expires, anything that encourages people to buy should boost sales if there is widespread participation among other brokerages.
Jim Gillespie, president and CEO of Coldwell Banker, who was in Las Vegas last week for a conference, said he doesn’t know how many people will participate, but expects plenty of interest. He said one difference with the federal tax credit is that this program is open to all potential buyers without any cap on income.
“I think this private-sector solution will represent a significant step toward continued recovery of the housing market,” Gillespie said.
Gillespie said the program allows sellers to have their homes stand out from others in the market.
The program is an offshoot of what some sellers already do — negotiate 3 percent of the closing costs into the final deal, said Bob Hamrick, CEO of Coldwell Banker Premier.
“Instead of negotiating that item, we are going to make it a marketing item and create some energy around it,” Hamrick said.
Hamrick said he expects equity sellers — homeowners with equity who have their homes on the market — to participate along with homeowners who are selling their homes through short sales. Lenders selling foreclosure homes aren’t likely to get involved, he said.
As for his take on the Las Vegas housing market, Gillespie said the national press has lumped Southern Nevada with Arizona, California and Florida about the run-up in prices and subsequent market crash, but he said he is looking west to gauge Nevada.
“I think what is happening here is analogous with what’s taking place in California,” Gillespie said. “You are probably 18 months behind California and in the next 12 to 18 months prices should go up and you will see sales continue to increase.”
Hamrick said what’s been overlooked about Southern Nevada is how strong the sales are. It’s like a boom market because inventory has fallen to a three-month supply, he said.
“With inventory dropping, homebuilders are competing better than before and at higher prices,” Hamrick said. “Buyers are making decisions to get away from (foreclosures) or buy a new home at a higher price because it is more convenient. That will have an affect on stabilizing prices and maybe move them north.”
Real estate attorney talks
Tisha Black Chernine, an attorney with Black & LoBello, told members of the CEO-CFO Group on April 23 that she isn’t too optimistic about federal programs encouraging workouts in preventing more homes from going through foreclosure, and worries more homeowners will opt to default even though they can afford their payments.
Black Chernine said 70 percent of local homeowners are underwater — they owe more on their homes than they are worth.
Government programs to encourage workouts between the homeowners and lenders have been geared for areas where homes aren’t so far underwater, she said. And because the programs are voluntary, they don’t have any teeth, she added.
“The programs work for an Iowa market or a Texas market that didn’t have a nuclear bomb go off in terms of valuation like we had,” Black Chernine said. “We are ground zero ... What happened in all these programs is they sound great, but they are meant for a cold sore, and we have syphilis,” she said.
Since housing prices have dropped so drastically, it won’t help homeowners unless they have a reduction in the principal, she said.
The problem is that many loans are owned by multiple investors, and banks are prevented from making those adjustments, she said.
Black Chernine also blamed lenders for continuing their practice of not working with homeowners until they default on a payment. Some homeowners are calling the lenders notifying them they won’t be able to make the mortgage when their adjustable interest rate resets, but the lenders won’t even talk to them until they are in default, she said.
Black Chernine said those going through a foreclosure shouldn’t expect they are off the hook for what they owe on the mortgage. The primary lien holder has six months after the foreclosure to file legal action to collect, but secondary lien holders have six years, and a lot of those notes are being sold on the market.
Those collection companies are contacting those homeowners seeking payment, she said.