Incentives heat up sales in cool markets
Upgraded bathrooms, professional landscaping are being offered; Pulte leads the way in Detroit.
Kamil Skawinski / bankrate.com
Time was that when you heard of a home being offered for sale with a discount or some other generous bonus, your first thought was, "OK, so what's wrong with it?" But with prices leveling off and properties now staying on the market much longer than they used to, it's becoming more common to find lucrative incentives offered on both newly built and existing homes.
Of course, everything depends on whether you're house hunting in a real estate market that has cooled. But if you're in the right place at the right time, you could wind up getting considerably more than you bargained for -- in the best possible sense -- when you make an offer on a home.
Tom Stevens, president of the National Association of Realtors, says home builders started offering incentives in cooling markets such as certain parts of Florida, Las Vegas, California and the Northeast.
"Home builders were among the first to react with various incentive programs and promotions to help keep their properties moving and to reduce unsold inventories," he says.
High-end kitchen cabinets and counters, upgraded bathrooms, generous hardwood flooring packages, finished basements and professional landscaping are just a few of the common gratis offers Stevens has heard of.
"And good old-fashioned discounts and cash incentives ranging between $25,000 and $50,000 are out there, too."
Three-quarters of the 369 homebuilders recently surveyed by the National Association of Home Builders said that they are now including once-expensive extras at no additional cost to help sell their homes. One-third reported that they are now also absorbing such costs as financing points on mortgages to help move unsold properties. Several even admitted to offering free vacations.
Generous incentive packages can be found in the Midwest.
"This year, there's definitely a lot more negotiating and discounting going on with most builders in our area," says David Balcerzak, vice president of sales and marketing at Pulte Homes in Detroit.
"But our company has taken a different approach. We're taking a much closer look at our potential buyer's situation and asking what we can do to help offer them a solution."
For instance, one of the biggest hurdles new home buyers now face is selling an existing home. To help them, Pulte (through its own mortgage company, Pulte Mortgage) has implemented a special program that basically covers three to six months of buyers' existing and new mortgages, both interest and principal, plus tax payments so that these customers aren't stuck with the pain of making twin payments on two properties.
While builder-incentive programs have attracted the most attention, developers aren't the only ones to offer inducements. More home sellers today are also including tempting freebies that go well beyond the usual appliances, fixtures and window treatments. Typical incentives can include assisting a buyer with closing costs, paying points, covering homeowners' association fees for a year or more or selling the home with a comprehensive warranty.
"If you're a reseller, your only real option is to price your house in a way that will sell, which is in itself an incentive," says Sacramento-based RE/MAX Gold agent Loren Ransier.
But if you aren't quite ready to make a home-buying decision right now, you probably need not fear missing out on today's generous deals.
"This whole thing with incentives is really just starting now," says McCabe. "There's no telling what types of very creative marketing offers we're going to see in the next couple of years."
Upgraded bathrooms, professional landscaping are being offered; Pulte leads the way in Detroit.
Kamil Skawinski / bankrate.com
Time was that when you heard of a home being offered for sale with a discount or some other generous bonus, your first thought was, "OK, so what's wrong with it?" But with prices leveling off and properties now staying on the market much longer than they used to, it's becoming more common to find lucrative incentives offered on both newly built and existing homes.
Of course, everything depends on whether you're house hunting in a real estate market that has cooled. But if you're in the right place at the right time, you could wind up getting considerably more than you bargained for -- in the best possible sense -- when you make an offer on a home.
Tom Stevens, president of the National Association of Realtors, says home builders started offering incentives in cooling markets such as certain parts of Florida, Las Vegas, California and the Northeast.
"Home builders were among the first to react with various incentive programs and promotions to help keep their properties moving and to reduce unsold inventories," he says.
High-end kitchen cabinets and counters, upgraded bathrooms, generous hardwood flooring packages, finished basements and professional landscaping are just a few of the common gratis offers Stevens has heard of.
"And good old-fashioned discounts and cash incentives ranging between $25,000 and $50,000 are out there, too."
Three-quarters of the 369 homebuilders recently surveyed by the National Association of Home Builders said that they are now including once-expensive extras at no additional cost to help sell their homes. One-third reported that they are now also absorbing such costs as financing points on mortgages to help move unsold properties. Several even admitted to offering free vacations.
Generous incentive packages can be found in the Midwest.
"This year, there's definitely a lot more negotiating and discounting going on with most builders in our area," says David Balcerzak, vice president of sales and marketing at Pulte Homes in Detroit.
"But our company has taken a different approach. We're taking a much closer look at our potential buyer's situation and asking what we can do to help offer them a solution."
For instance, one of the biggest hurdles new home buyers now face is selling an existing home. To help them, Pulte (through its own mortgage company, Pulte Mortgage) has implemented a special program that basically covers three to six months of buyers' existing and new mortgages, both interest and principal, plus tax payments so that these customers aren't stuck with the pain of making twin payments on two properties.
While builder-incentive programs have attracted the most attention, developers aren't the only ones to offer inducements. More home sellers today are also including tempting freebies that go well beyond the usual appliances, fixtures and window treatments. Typical incentives can include assisting a buyer with closing costs, paying points, covering homeowners' association fees for a year or more or selling the home with a comprehensive warranty.
"If you're a reseller, your only real option is to price your house in a way that will sell, which is in itself an incentive," says Sacramento-based RE/MAX Gold agent Loren Ransier.
But if you aren't quite ready to make a home-buying decision right now, you probably need not fear missing out on today's generous deals.
"This whole thing with incentives is really just starting now," says McCabe. "There's no telling what types of very creative marketing offers we're going to see in the next couple of years."
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