Looming tax credit deadline spurs return of real estate bidding wars

The deadline for first-time home buyers to take advantage of the government's $8,000 tax credit appears in line for an extension. But the popular tax break has already been fueling a phenomenon that many struggling real estate markets haven't experienced in years: bidding wars.

Lower-priced homes on the market in many once-beleaguered areas have seen a flood of offers, say real estate brokers from Boston to Portland, Ore. Though the original tax credit is good on homes sales completed by Nov. 30, because home deals can take months to complete, new buyers are rushing to close escrows so they don't miss out on the credit.

"It's a welcome change from the way things have been around here," says Carrie Novotny, a realtor in Edina, Minn., outside Minneapolis. She says a recent open house for a two-bedroom, Craftsman-style home listed at $213,000 drew several dozen prospective buyers and more than five serious bidders. The home eventually went into contract for $217,000, Novotny says. "It's been a bit crazy," she says. "People really want to nail down a sale to cash in on the tax break."