January 27, 2006

CNN: As the market slows, home sellers are throwing in sweeteners to move properties

FYI - incentives like these below, and also the $100,000 Centex give-away, will NOT affect median or mean home sale values. These off-balance-sheet entries are indeed depressing prices though - the price the home can sell for after the receiver of the give-away closes.

($500,000 house - VW Beetle) = $470,000 true price, but $500,000 sale price recorded in the mean and median numbers. Now, if they'd throw in Lindsay Lowhan, that'd be another thing...

Great gimmick by the real estate industrial complex to keep the suckers buying and buying

Everybody wants something for nothing, and as housing markets slows, homebuyers are starting to get just that. Sellers, reluctant to drop home prices, have been finding creative ways to move product.

The trend is especially evident among developers and homebuilders who have to act much more decisively than individual homeowners who have the option of sitting tight.

Some recent freebies include trips to Las Vegas, home-entertainment and security packages, furniture store gift certificates, golf club passes for a year -- even swimming pools

Steve Melman, a spokesman for the National Association of Home Builders (NAHB) reports that sales incentives have become the rule among its membership -- 56 percent feature non-price incentives.

One builder, Georgia-based Forrest Homes, is giving away a two-year lease on a Volkswagen Beetle with a home purchase. That's right, these houses come with their own Bugs.

Pulte Homes, a Michigan-based homebuilder, is paying the heating bills for six months to anyone who buys a home in one of its Maryland developments. Pulte also will throw in a free-gas fireplace, hardwood floors, upgraded cabinets, and a washer/dryer -- and a 42" plasma TV.


Wes D said...

Gimmicks are always used first to try and snare stupid people. Once the sellers realize that gimmicks aren't attracting people they will begin to lower prices.

Riskbabe said...

Argent has that Danica racecar chick, and the rest of us get Lindsay Lohan???

Anonymous said...

Builders must decide prior to completing unsold homes, to upgrade to granite , better cabinets, travertine ,etc. Homes had been selling before completion and the builders were make more money on upgrades. Now there upgrading at no cost to the buyer. Also new homes sales for dec were probably better than they should have been reported. Builders pushed to close homes due january to help dec #'s.

Anonymous said...

Have we ever gotten the word on the nature of Centex's $100K upgrades? Is is $100K off the bottom line or is it $100K worth of upgrades, etc.

FWIW, though CNN pooh-poohs (*cough*) those dual-flush toilets, that is an improvement worth having.

I got a Sterling-Rockport (Kohler -- the same one in the article?) for like $75 after a county (Santa Clara County, CA) subsidy/rebate (they're $200 new) and put it in my house about a year ago, and it works great. I never had a problem because the normal flush is, well, the normal flush. Rather than try to give you one hi-tech flush, they give you the normal flush with one button and a half-the-water flush with the other button. That's where your savings come from.

Anonymous said...

You wouldn't want Lindasy Lohan moving in. She'd clean out the liquor cabinet.

Anonymous said...

I think we should have a contest to give the poor builders new ideas for creative giveaways that won't affect the "median price" number that NAR people need to keep pointing at so they won't have to stop repeating the phrase "soft landing." WE should also do something to help out the poor realtors who just got their license and now find they have to sit at open houses six days/week instead of one. In my neighborhood this weekend I was thinking of offering permanent sign holders for the many many open house signs that now appear at major intersections. I'm sure there is profit in designing the right marketing gimmick that will snare the last 100 people who still want to get in near the top of this absurd bubble. Let's look for things that appeal to people who don't read newspapers or know anything about finance: free hot tubs, NASCAR season tickets, big screen TVs or a year's supply of Bud Light! I'll offer some homebuyer incentives myself:

1. A free copy of the film: "Dude, Where's Your Life Savings?"
2. A year's supply of Mister Bubble.
3. A hammer (to hit things with).
4. The names and addresses of the NAR leadership, officers of Ameriquest, Countrywide, WaMu, etc.
5. 30 days of free storage at U Store It (the other 9 months they'll have to buy themselves).

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