Incentives

Sellers, Realtors Craft Incentives to Drive Traffic for Resales

By R.P. WHITTINGTON

It seems like an eternity ago to most realtors, home buyers and sellers, but it was only last summer that houses were selling in days and home prices were rising at a blistering rate.

As the housing market has gone through a painful stabilization process over the last year, builders are offering what some realtors call “extreme” discounts to move their existing inventory – ranging from price reductions to offering vehicles, appliances and other enticements to lure buyers to the dotted line. But in addition to new homes, nationally there are nearly 40 percent more existing homes on the market today compared to the same time last year.

With inventory numbers like that to deal with, realtors and sellers are coming up with their own incentives to drive traffic.

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Bruce Kaufman worked with Prudential Realtor Phil Pierce and agreed to offer a four percent commission to the buyers’ agent to encourage more traffic to his house at 628 Preserve View in Marsh Harbor, which is priced at $699,000. For resale homes, the primary incentives being offered in the First Coast either benefit the buyers’ realtors by offering higher commissions when they bring in a sale (called co-ops among realtors), provide monetary enticements for the buyer at closing, or are a combination of both.

“Last year, sellers could afford to negotiate with their realtors to drive down their commissions, but that’s not the situation now,” said Prudential Network Realty’s Phil Pierce.

Today, agents can now command the entire traditional six and a half percent commission, or more, which can be used to offer anywhere from three to six percent in additional commission for the buyers agent to encourage more traffic and, hopefully, a speedier sale.

One of Pierce’s customers, Bruce Kaufman, agreed to offer a four percent commission to the buyers’ agent to encourage more traffic to the home he’s selling on Preserve View in Marsh Harbor, which is located off State Highway 210 in St. Johns County. Priced at $699,000, the 3,390-square-foot home offers four bedrooms, four baths, and a screened-in patio.

“Marsh Harbor is a nice, quiet gated community and it has a lot going for it,” Kaufman said. “It’s a great spot if you have a boat, close to the Intracoastal, and

there’ll soon be a marina here, but you need people to see it. We decided the incentive would help attract more realtors and potential buyers. There are so many homes out there that you have to do something to set yours apart from the rest.”

New home sales, which represent about 15 percent of the market, have declined 12 percent this year – forcing sellers of new homes to offer tens of thousands of dollars in incentives, make mortgage payments, buy down loans, put in swimming pools, or pay points.

For resale homes, the primary incentives being offered in the First Coast either benefit the buyers’ realtors by offering higher commissions when they bring in a sale (called co-ops among realtors), monetary enticements for the buyer at closing, or a combination of both.

To compete with builders, realtors say sellers of existing homes first need to be more realistic in setting their sales price in the current market.

“Customers who are selling their homes are not only competing with other resales, but with new homes as well,” said Cici Anderson, a Prudential Realtor in Ponte Vedra. “Since there are a limited number of buyers in the market, you need make sure you’re at a competitive price point, and then do what you can to position your property so it’s seen by more prospective buyers.”

Anderson and her sellers recently offered a $25,000 gift certificate for the buyers’ agent who could help her close a $1.3 million home in Ponte Vedra by the Sea Estates. While she ended up selling the home without the incentive in the end, she says it did drive more traffic to the property.

“The incentive you choose really depends on the situation,” Anderson said. “Whether you offer an incentive for the buyer or the buyer’s realtor or both, the key is to be creative so that whatever you’re offering gets attention and drives traffic to your listing.”

Similar to new home sales, other incentives include paying homeowner association fees or closing costs (not including taxes and insurance). But the range of the giveaways is limited only by the imagination of the seller and realtor.

Billie Dowell, a realtor with Watson Realty Corp. in the Arlington/Fort Caroline area, worked with her seller and is now offering an $11,000 bonus for the buyer of a home in the Harbor Woods subdivision. The 2,214-square-foot, four-bedroom, 2.5-bath home is priced at $299,997.

“The buyers can’t receive it as a cash payment, but they can use it to buy-down the interest rate on the mortgage by about a point on the first year of the loan, defray closing costs, or reduce the amount they need for loan qualification,” Dowell said.

“My favorite idea is to use the bonus to pay the first six months of mortgage payments.”

Dowell said she and the seller originally discussed the buyers’ agent incentive, which Dowell had offered on other properties before, but they decided on a different approach.

“As agents, we have to sell the house before we’re paid, so why not offer the incentive directly to the buyer,” she said. “We wanted to give the buyer more help and flexibility to get into the home.”

And how has it worked?

“The incentive is perking up interest and I’m getting calls about it,” she said.

Incentives are nothing new to Dowell, who has worked in the real estate business since the 1980’s.

“When buyers were faced with 21 percent interest rates, we realtors had to come up with creative ways to get people into homes,” she said.