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Source of Title Blog

Get A Free 2008 Mustang!
by Robert Franco | 2007/11/29 |

What does it take to get people to buy a home in the sluggish real estate market? How 'bout offer a "free" 2008 Mustang to anyone who buys a home? One broker in Marina, California is making just such an offer.

"We want to make sure people notice with all the other promotions we doing that we're ready to make some deals happen, and the car just one way of showing that we're a cut above of what's going on in new housing market in Marina," Smith said.


The promotion started two weeks ago and so far nobody has accepted the car, but one buyer did buy a home and had the $26,000 price of the car taken off the asking price. Incentives are becoming much more popular with builders and some individual sellers. They are offering real estate agents thousands of dollars in bonuses and travel vouchers to Realtors who get their homes sold.

How is that for a conflict of interest? According to an article on RealEstateJournal.com, buyer's agents are being offered incentives that they buyers aren't aware of. Whether or not the Realtor passes the benefit along to their buyer is up to them.

Source of Title Blog ::


Las Vegas builder American West is offering agents a $15,000 bonus to sell homes in its Glen Eagles development, provided they come in with a full-price offer within 30 days. The bonus drops to $10,000 for negotiated offers and those that take longer. "The goal is to try to push them to make a full-price offer," says Jeff Canarelli, vice president of sales at the builder. It is up to the broker to decide whether to give the bonus back to the buyer, he says.

...

The best defense for buyers may be to insist that agents disclose the compensation being offered on any property under serious consideration. That way, consumers could negotiate ways to share anything that goes beyond a normal pay day for the agent -- or at least take the incentives into account in assessing the agent's advice. But few consumers raise such questions. Daniel Ruben Odio-Paez, a broker in the Washington, D.C., area who operates a real-estate search site, www.tbhse.com, says he believes "most buyers have no clue how their agent is being compensated."

The National Association of Realtors, the dominant trade group for real-estate agents, doesn't require its members to tell buyers in advance of a purchase how much the agents will be compensated. Federal rules require bonuses and sales commissions to be disclosed on the HUD-1 settlement statement, but buyers don't see that document until the closing or shortly before. At that point, it would be awkward to start negotiating with an agent about the compensation. The federal rules, enforced by the Department of Housing and Urban Development, or HUD, don't require agents to disclose trips or other noncash awards.


We are in the midst of the worst housing slump in 16 years and its getting worse. Foreclosures are up 94% from a year ago, according to a RealtyTrac press release. The hardest his states are Nevada, California, Florida, Ohio and Georgia. The national foreclosure rate for October was one foreclosure filing for every 555 households. And, remember, the peak of the adjustable rate, subprime loans are scheduled to reset the first half of next year.

With the glut of homes on the market, and an increasing REO inventory, what will it take to spur buyers to take action? Lower interest rates? Can they really get much lower? With the realization that there are risks associated with mortgage backed securities investors may not be willing to pump more money in to mortgages with lower rates. Lower home prices? They are already falling and to some extent, the inability to lower the selling price will prevent many sellers from making that move. High loan to value ratios mean that many homeowner cannot afford to reduce their selling prices. In this market, we will certainly see more creativity and incentives will become more popular. As one Realtor said, "all you have to do is ask." Buyers may be able to get freebies, upgrades, closing costs, even free cars.

Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com



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Categories: Foreclosures, Innovation, Realtors

952 words | 2726 views | 1 comments | log in or register to post a comment


Robert said "Buyers may be able to ...
Robert said "Buyers may be able to get freebies, upgrades, closing costs, even free cars."

We've seen a huge increase in the number of sellers and builders offering incentives in the Northeast. Just take a look at the posts on Craigs list. It's been my experience that these tactics don't work. By offering these large incentives you are essentially waving a flag of desperation. The majority of buyers will continue to holdout.

 
by Shane Kane - TitleSuccess.com | 2007/11/29 | log in or register to post a reply
Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco
SOURCE OF TITLE

 

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