Home Sellers Sweeten The Deal
January 27, 2008 - Real estate flipper Val Tatasciore last year offered a classic blue Mercedes two-seater sports car as an incentive to anyone who paid full price for his Madison beach house, then on the market for $1.44 million. But the Mercedes, valued at $26,000, failed to entice a buyer, so Tatasciore withdrew the offer.
His real estate agent, Lili Mastronardi of H. Pearce Real Estate, said Tatasciore has been paying the mortgage on this investment property while the house stays on the market and can no longer afford to sweeten the deal with the Mercedes. It is in the garage and also for sale — separately from the house.
Home sellers are using incentives like cash bonuses to the buyer’s agency and gifts of personal property to the seller at closing, such as a pool table, dining room set or entertainment unit. But sellers aren’t as desperate as the public may think, agents say. While incentives may bring more lookers to a home, ultimately it’s all about the price, and many sellers are holding firm.
“I’m seeing more credits [than in previous years], like a $2,500 credit for decorating or a carpet allowance,” said Marie Mansolillo, an agent with William Raveis in West Hartford. But, she added, “I haven’t seen boats or cars or vacations.”
Offering cash bonuses to agents has become increasingly popular, and amounts from $1,000 to $10,000 aren’t uncommon. The seller of a $1.2 million home in West Hartford offered $7,500 to the agent who could bring a buyer in the door by the end of 2007, said Kara Flanagan, an agent for Coldwell Banker in West Hartford. When the bonus was advertised to agents, Flanagan noticed that traffic at the house did pick up. But the house is still on the market, and the bonus went unclaimed.
Flanagan said she had heard of a Windsor couple who successfully sold their home, offering two free plane tickets. They believe the incentive helped.
Some agents take a dim view of incentives; others think they can help, but only a bit.
“Offering plane tickets to buy a $500,000 house cheapens the transaction,” said Evan Berman of ERA Broder Group in West Hartford. He also said a cash incentive offered to him would not motivate him to sell a house.
“I am looking out for my client’s best interest, and I’m in the business of building long-term relationships,” Berman said. “A large percentage of my business comes from referrals.”
Real estate agent Joe Kelly said one of his clients owns a car dealership and is thinking about offering a free three-year lease on a car to the person who buys his home.
The come-on might help create additional visibility, said Kelly, of Page Taft Real Estate in Essex, “but I don’t think anyone is going to buy the place because of it.”
Kelly has been experimenting with “value range pricing”: Instead of offering one set price, the seller offers a low and a high price, indicating a willingness to negotiate. One of Kelly’s listings is an unusual 1850 federal colonial on the Connecticut River in East Haddam, with a swimming pool and a deep-water dock. It has been on the market for more than a year, so the client decided to list it from $999,000 to $1.125 million.
“We’re trying to create more activity, and to turn casual buyers into serious buyers,” Kelly said. “If we just listed it at the $1.125 million, we wouldn’t get as many people to look. It’s a marketing strategy. The property owner is not required to take the low offer.”
Buying down the mortgage is another incentive that can appeal to a home buyer. Mortgage broker Scott Beckwith of East Shore Mortgage Co. in Madison said a seller can offer the buyer a discounted rate through the mortgage company. If the buyer’s mortgage would be $250,000 at 6 percent and the seller agreed to pay 2 points, that would effectively lower the mortgage rate to 5.5 percent. The monthly payment would drop nearly $80 a month, for a savings of more than $28,000 over the life of the 30-year mortgage.
This option isn’t pushed by many real estate agents, because they don’t know how to present it, said Karen Stephens, owner of Page Taft Real Estate in Guilford.
“If interest rates rise in 2008, you will see it more, because it can get a buyer into a house that they would otherwise not be able to afford,” Stephens said. “It’s all about the monthly payment. If the buyer can save $100 or $200 on the monthly payment, it may be enough.”
Although mortgage rates are favorable, homes are staying on the market longer than last year, Mansolillo said. Many sellers believe their home should sell for the same price their neighbor’s sold for a year ago, but the market has changed.
“If houses are priced correctly, they will get moving,” Mansolillo said. “If the house is in good condition and just needs decorating, buyers are willing to jump, but you don’t see the frenzy of multiple offers that you would have seen in years past. Houses are not flying off the shelf; you have to be realistic.”
Sellers Sweeten The Deal
By ALIX BOYLE | Copyright © 2008 The Hartford Courant