Robert Freedman is the former director of multimedia communications at NAR.
Use the First-Time Buyer Tax Credit to Build Business
Despite the doors it can open for first-time buyers, many consumers still don't know about the $8,000 tax credit.
May 1, 2009
The first-time home buyer tax credit, which Congress in February increased to $8,000 from $7,500 and eliminated the repayment requirement, is an incentive you'd expect consumers to be clamoring about. But many practitioners are astounded to learn that buyers in their markets who are prime candidates for the credit aren't even aware of it.
Ryan Gable, broker-owner of Starting Point Realty in Palatine, Ill., recently mentioned the credit to an architect who was attending one of his home buyer seminars. If anyone would know about the credit, Gable thought, it would be someone who’s involved in the building industry. But he was wrong. "It was like she won the lottery when I told her," says Gable.
His brokerage, which focuses on first-time buyers, has pulled out all the stops to market the credit as a too-good-to-miss opportunity. In addition to touting the credit at seminars, Gable showcases the incentive on the home page of his Web site and discussed it in an interview with a local NBC affiliate TV station. "It’s really unbelievable the number of people who don’t know about it," Gable says.
It's an information gap that Rochelle Gano, ABR®, and her colleagues at New Tradition Realty in Vancouver, Wash., are also working hard to close. Gano's brokerage in March rolled out a spring home buyer seminar on how to use the credit.
"I have a client I’m working with right now who’s using it," says Gano. "He specifically decided to buy because he heard about the credit. The seminar can reach people like him with the information they need."
In situations such as this, says Gano, the credit is an effective tool to get buyers off the fence. And it became an even better market booster on May 12, when Shaun Donovan of the U.S. Department of Housing and Urban Development announced that FHA has changed its rules and will now allow buyers to use the money up front for their down payment.
Prior to that, there was no direct way to use the credit to get money before buyers received their tax return, and that was a major stumbling block, Gano says. Several state housing finance agencies—including those in Missouri, Ohio, and Tennessee—had confronted that hurdle with an advance loan program. But the NATIONAL ASSOCIATION OF REALTORS® wanted more to be done on the federal level, and in March urged HUD to give buyers access to tax-credit funds in a more direct way.
What's Your Marketing Strategy?
Notwithstanding these shortcomings, there’s no doubt that the credit is a great benefit around which real estate practitioners can build a targeted marketing campaign. Since launching his education efforts, Gable says he’s seeing considerable interest from buyers, especially after the TV interview. "It’s starting to catch on," he says.
But a word to the wise, says Eunice Beekman, ABR®, CRS®, of House to Home Properties in Waupun, Wis.: Don’t let the looming termination of the credit—it’s authorized only until Dec. 1—dictate the haste with which you develop your marketing program. Shortly after Congress improved the credit in February, her brokerage quickly rolled out a home buyer seminar on the topic. But they gave themselves only a week to market it. The result: no registrants. "It was too last-minute," she says.
Updated: May 23, 2022