RISMEDIA, Oct. 23, 2007-(MCT)-If there is any doubt that today’s Pierce County, Washington, housing market is one fit for buyers, check out these offers:
–A $5,000 furniture gift card on North Tacoma condominiums selling for $249,900 to $342,900.
–A $15,000 bonus in a gated community of houses in Parkland.
–A 2005 Honda Civic with a three-bedroom West Tacoma house priced at $549,500.
–A $15,000 shopping spree at Posh Home with a two-bedroom downtown Tacoma condo.
Slowing sales and growing inventory mean sellers increasingly are offering an array of come-ons to potential buyers and their real estate agents.
Such an atmosphere differs considerably from just two or three years ago, when buyers competed with multiple offers, were outbid, and sellers declined to make concessions they now readily make.
In September, 2,107 new Pierce County homes — condos and houses — were for sale, a 26% increase over the same month a year ago, according to Northwest Multiple Listing Service figures.
New-home builders are pushing buyer incentives to stand out from the subdivision crowd, said Tom McCollum, a real estate agent selling homes at Stoney Ridge, a 39-house development in Frederickson.
Buyers there are eligible for a $20,000 incentive.
“The market has obviously changed, and there’s a lot of standing inventory,” McCollum said. “Once inventory is cleaned up, they’re not going to have to offer $20,000 buyer bonuses.”
While higher here than in recent years, inventory levels are not nearly as high in Pierce County as they are in other parts of the country, such as Miami and parts of California.
CASH BONUSES COMMON
Common among local incentives are cash bonuses that can be applied to closing costs or to a down payment, to buy down the interest rate on a mortgage or to purchase upgrades, such as wood flooring or granite counters.
Parkland subdivision AutumnWood opened for sale last year and added a $15,000 buyer bonus in August.
Houses in the 123-unit project are priced $289,000 to $346,000, said John L. Scott agent Jeffrey Williams.
“As the market has turned we have to come up with new and better ideas to motivate the buyer,” he said.
Reservations at The Marcato’s first building of several planned in downtown Tacoma started three years ago.
Thirty of the 93 units remain for sale, said sales manager Stacy Kovats. She’s in charge of development and marketing for the project.
“We’re by no stretch disappointed to have inventory right now,” she said.
Previously, The Marcato offered a $15,000 shopping spree at Posh Home on all its units. Now, buyers of two-bedroom units are eligible.
“Is it what sells our building? No, it’s not. I think it’s more of a buyer-appreciation tool,” Kovats said.
As a first-time buyer, Brent Hogenson said he comparison shopped condo prices and incentives for six months.
The Posh Home package was particularly attractive, because he recently moved from San Diego with little to fill his place.
After Hogenson, 26, bought a two-bedroom unit in August, a designer helped him pick and choose from the Tacoma furniture store. Hogenson ended up with a sectional couch, a desk, bar stools, a chaise lounge, lamps, a dresser, a bed frame and a bar.
“She just let me go with whatever I wanted,” he said. “I loved it.”
Builders Favor Incentives
Builders and developers typically are reluctant to lower prices in favor of incentives. A reduction in price comes directly off the bottom line, whereas an upgrade, such as crown molding or an entertainment system, could cost the builder less, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.
“It makes it look like they’re contributing more than might really be the case,” he said. “It’s a marketing ploy.”
Plus, lowering the price on one new house in a subdivision could impact the prices on subsequent sales and the value of nearby homes.
“If they’re offering homes for sale for less than previous purchasers paid, they get a lot of negative reaction from folks who recently moved into their neighborhood,” Crellin said. Consumers should shop around to be sure they are getting value for their incentives, said Patricia Mertz Esswein, associate editor at Kiplinger’s Personal Finance magazine.
Mertz Esswein recommended looking for add-ons that might coincide with the demands of the homeowner’s association, such as window coverings or fencing.
Also, builders often couple bonuses with a pre-selected lender, said Mertz Esswein, who recommended checking a loan’s terms against other offers.
“It doesn’t pay to get upgraded countertops if you’re paying a higher interest rate over the long run,” she said.
Gifts for Your Garage
David Groff, 38, listed his West Tacoma house more than a month ago and added a 2005 Honda Accord as a bonus a few weeks later.
His 3,000-square-foot home, with a view, is priced at $549,500.
“The house has a lot to offer, but there are obviously a lot of houses for sale,” he said. “The car idea was just some kind of tangible thing you can see and feel more than a cash bonus.”
Bob Mortimer added a 1954 Cadillac to the sale of his Gig Harbor home after several months of no buyers.
His four-bedroom house — now at $849,000, down from $895,000 — has been for sale for nearly a year.
“I thought it might be a fun thing to do to offer it with the house instead of lowering the price again,” Mortimer, 53, said.
RE/MAX real estate agent Ed Winkle said he uses ski passes and getaways to lure buyers to homes he’s selling in the Gig Harbor area.
“Is it a gimmick? Yes. Were we hoping someone would take us up on it? Yes,” he said. Winkle compared the marketing strategy to deeply discounted items used by retailers, known as loss leaders, to get shoppers into stores.
Earlier this year, a waterfront house he was selling came with two Chevrolet Aveos — one for the buyer and one for the agent.
It was offered for two to three months.
“It did expire, and two days later we had someone who stepped up and bought the house. But they didn’t get the cars,” he said.
Incentives don’t always bring the attention, or buyers, a seller is looking for.
Bill Riley, an owner of Gateway Real Estate, said he raised the price of a house in Puyallup by $15,000 recently and added a Harley-Davidson motorcycle to the listing.
“Sometimes things like that capture a person’s attention. It didn’t work. We did it for three weeks. We dropped the price back down,” he said.
Other real estate agents tell their clients to avoid incentives in favor of discounting the price on a listing.
Buyers, said Windermere agent Mike Tinder, want a good price. Plus, today’s home shoppers respond to price reductions, because they can use money saved from lower house payments to pay off credit card debt, he said.
“I think giving away a car is a bit silly. I think cash is king,” he said.
Copyright © 2007, The News Tribune, Tacoma, Wash.
Distributed by McClatchy-Tribune Information Services.