Incentives for Everybody!

By RP Whittington

Yes, it is the best time to buy a home.

But if historically low interest rates and a great inventory of homes weren’t enough, homeowners and residential developers are coming up with some great incentives to get buyers off the fence and signing on the dotted line.

There are folks offering boats (and even their own dogs) to entice buyers to purchase their properties. And while realtors and sellers agree that the more creative incentives grab attention, which is the ultimate goal of offering them in the first place, incentives have been part of the sales equation for a long time…and will continue to be as the residential market strengthens over the next year.

Incentives can range from sellers offering to pay a portion or all closing costs or buying down points off the mortgage loan, to selling wide screen televisions or offering free upgrades to close the deal.

Some sellers direct their incentives at realtors in the hopes that extra bonuses and commissions will encourage them to identify more potential buyers more quickly.

For example, a condo owner selling her home at Marina San Pablo in Jacksonville Beach is offering a $5,000 gift card for the buyer’s agent who brings her a contract for the property, listed at $679,000. The two-bedroom, two-bath condo has a lot going for it already – with amenities like hardwood floors, granite countertops and stainless steel appliances along with a balcony offering a great view of the Intracoastal Waterway.

"Whether it’s offering gift cards or giving realtors higher commissions, innovative sellers have many possible incentives to put to use," said listing agent Michelle Cummings of Prudential Network Realty/Atlantic Beach. "In a market like this one, you can get pretty creative."

Cummings says incentives like these are actually pretty common – and many were there even when the market was red-hot.

"Even then we were offering pre-construction sale pricing and other things to get additional interest in our properties," Cummings said. "Today, with so much housing inventory out there and so much competition, these types of incentives represent another way to set our property apart from the others on the market."

Randy Shelton, who represents The Strand condominium project as Vice President of Sales for American Land Ventures, recently announced a $5,000 incentive to realtors who could bring new buyers under contract by the end of November. The amount was $2,000 for those who had a contract in place by the end of December.

"Using additional commissions is a tangible way for us to tell realtors we don’t mind paying more if you can bring us buyers," Shelton said.

Condos at The Strand range in price from the low-$200,000’s to the mid- $800,000’s at the 295-unit development, under construction on the Southbank next to another American Land Ventures project, The Peninsula.

Over in Riverside at The Chelsea Lofts, a 20-unit condominium development at Herschel and Goodwin streets, Cranewoods Development is offering buyers a choice between a Vespa motor scooter, paying homeowner association fees for a year, or a flat-screen plasma television.

Cranewoods Manager Andy Howe says he and Lifestyles Realtors Sales Director Chris Donovan came up with the Vespa idea.

"The Vespa seemed like a better fit for the project," Howe said. "But we also came up with some other incentives so buyers would have choices. For the investor, having your association fees paid for a year may be more inviting than a Vespa. For the buyer who plans to live there, the Vespa or plasma TV. may represent a more valuable incentive."

At two other Cranewoods projects, The Cottages at Ponce Inlet and The Abacos at Salt Run in St. Augustine, incentives include paying the buyer’s property taxes for the year and a 10 percent discount during pre-construction. At the NorthShore Condominiums at Jacksonville Beach, Cranewoods employed two interior design firms to beautify two model units there as an incentive for buyers.

Developers and their sellers, through their realtors, typically get the word out on incentives through websites, by using the multiple listing service (MLS) or by sending e-mail cards and flyers directed at other real estate offices.

"When we are discussing how to market a property, that’s when the incentives come into play," Cummings said. "We look over the options, whether we want to direct incentives to the buyer or the buyer’s agent, and then determine which will work better with a particular property. It really depends on the property itself and the neighborhood."

So will buyers continue to see incentives offered on residential properties as the market improves?

"It’s hard to say," Cummings said. "I think it really depends on each seller’s situation…how quickly they want to move their property. That’s why we’re seeing a lot more incentives come into play over the last several months."

Homebuyers who do take an offer on a property that includes an incentive as part of the deal do need to make sure that if it is something tangible that is outside the financial transaction – a boat, a wide-screen television, or even furniture – that the incentive is addressed in writing, whether part of the contract addendum or as a separate agreement.

"Unfortunately, verbal agreements don’t mean anything these days," said Margie Armento, a loan officer with JP Morgan Chase Bank, N.A. of Jacksonville. "Homebuyers need to make sure to cover themselves to ensure they get the items they are expecting when they close on the loan."

Media Contact: Ron Whittington (904-563-0402)