WASHINGTON (TheStreet) — Now that popular tax credits for homebuyers have expired, sellers and realtors are offering free appliance upgrades and $8,000 incentives to keep buyers from putting off home purchases.
The first-time homebuyer tax credit offered up to $8,000 for first-time buyers who entered into a binding contract by April 30, and up to $6,500 to homeowners who upgraded to nicer homes. The incentive, which began last year, helped ease the property market's painful decline. Now that the credits have expired, real estate companies are offering their own incentives for buyers and sellers, some equal to the value of the tax credit.
Through June 30, Century 21 is running "The $8,000 List Your Home Sweepstakes," giving sellers who list their homes with the real estate company a shot at winning $8,000. Twenty-one prizes will be awarded, one per month for seven geographic zones.
Other realtors are encouraging sellers to offer their own credits to woo buyers off the fence. Courtney Snyder, a Coldwell Banker realtor who serves Greater Boston, has been suggesting that sellers offer a credit toward the buyer's closing price, making the deal contingent on a sale.
"It incentivizes a buyer to get an offer in," she says. "It's like a price adjustment that gives the buyer a little bit of control."
Coldwell Banker has formalized that strategy companywide. On May 1, the company launched the Buyer Bonus Sales Event, a campaign in which participating sellers offer a 3% credit on a home's purchase price — up to $8,000 — for buyers who sign a contract before July 31. The sellers take the hit, but they receive yard signs tagging them as participants, promotion on the realtor's Web site and the benefit of a national TV advertising campaign publicizing the event.
In condominium complexes, which are often the residences of choice for first-time buyers, developers have been adding free appliance upgrades and discounts on closing costs and condo fees, says Dave Liniger, chairman and co-founder of the real estate giant Re/Max International in Denver. And in some small towns and cities, realtors are persuading local businesses and shops to offer discounts to new residents.
Last month, 5.3 million properties were changing hands at an annualized rate, compared with 4.6 million a year earlier. In November, when another first-time home buyer's credit was set to expire (but eventually received a five-month reprieve), sales surged to a rate of 6.5 million, according to the NAR.
"Unfortunately it will take people on the bubble of affordability off the market," says Pam Liebman, chief executive of the Corcoran Group, a real estate firm that focuses on the New York market.
"The current market is being very heavily influenced by first-time buyers and investors, and often the investors are getting the upper hand," Liniger says. "What we see repeatedly is that if sellers have an offer from a consumer and an offer from an investor, you'll see them take the offer from the investor."
"We've actually seen a slight increase in inventory, which tells us that sellers are gaining faith in the market," says Kevin Sears, co-owner of Sears Real Estate, which sells houses in Massachusetts, where the number of homes for sale in March was up for the first time in 23 straight months compared to the same months the year before, according to the Massachusetts Association of Realtors. Nationally, inventory in March amounted to an eight-month supply based on current sales rates, according to the NAR.
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