According to this article at bankrate.com, the incentives for home buyers have become pretty substantial, too. We’re not talking big-screen TVs anymore — they’re paying closing costs, buying points on people’s mortgages, and offering considerable discounts ($40,000 or so) off landscaping, etc.
As quickly as the housing power shifted, the incentives that builders and home sellers use to market their homes have changed as well.
“The incentives today are different,” says Dianna Kokoszka, vice president of Mega Achievement Productivity Systems at Keller Williams Realty. “The big-screen TV worked for a home builder many years ago. Now builder incentives are $40,000 to $50,000 off landscaping in the front, new appliances, 1.5 points if you go through our mortgage company and an allowance if you use our decorator.”
Case in point: This year, Prudential New Jersey Properties launched its Power House buyer incentive package that includes one year of an American Home Shield Warranty, a mortgage buy-down, a “closing gift” of 0.5 percent of the sale price and a minimum 3 percent commission to the selling broker.
Kokoszka says today’s buyer wants money-in-pocket value, not frills and playthings. If your home is competing with nearby new construction, be prepared to offer the same or equivalent incentives as the builder.
“What happens with builders is, if you came in six months ago and bought a home for $400,000 and I come in today and can buy that same home for $350,000 and your home is not built yet and you haven’t closed, you’re not going to close easy and we’re going to have a problem. Builders have to keep that price constant or going up,” says Kokoszka.
“So if you bought for $400,000 and they know I’m not going to buy for more than say $350,000, they will say things like, ‘If you go through our mortgage company, we’ll give you $30,000 off the sales price and a $20,000 allowance at our decorator.’ So now, when we talk, I paid the same price as you and all of the Housing and Urban Development settlement statements say the same thing.”
I’ve never had to offer incentives to get renters into my duplex, although I have had to put the rent pretty low the first year. I’ve only edged up from it, for fear of it going vacant (in which case I’m out $1000). From the small amount of research I’ve done, it seems that rents have (on average) gone up 2.5-3% in the past year, so I should be able to ask at least $30 more next time I’m signing a lease…
- Duplex - a better investment than a condo or single family home?
- The McMansion is (finally) falling out of fashion?
- Blasphemers! (or, is a house a liability rather than an asset?)
- So, the rental market is getting a bit better. But (predictably), condos are getting in the way.
- Want to buy more house than you can afford? Get a 40-year mortgage!
- Thinking about another duplex. But only if it can cashflow.
- If you can't rent it, sell it
- Rents Rising?