Today: October 13, 2006 at 8:1:22 PDT
By Brian Wargo
Las Vegas Sun
Home sellers who have watched the market move from sizzle to fizzle are taking a page from the big homebuilders , offering everything but a spare kitchen sink to entice buyers.
With more than 20,000 homes on the Multiple Listing Service – a nine-month supply based on the current rate of sales – sellers are getting creative. Their home listings describe not only bedrooms and baths but what else the buyer can get after closing the deal: cruises, airline tickets, cars and other giveaways.
It’s a far cry from a year or two ago when a seller did little more than list a house and sit back while multiple offers rolled in from competing buyers.
Today, buyers are in the driver’s seat and calling the shots. They’re asking the sellers to make the down payment, cover the closing costs and homeowner’s association dues and pay the special improvement district assessments.
Some sellers are even offering to pay six to nine months of mortgage payments.
Real estate agents are being wooed by sellers, too, with offers of 5 percent commissions instead of the normal 3 percent.
“In this market, we are competing head to head in a big way with new home inventory,” said Linda Rheinberger, president of the Greater Las Vegas Association of Realtors. “We are responding directly to competitive conditions and assisting the buyer where it counts, which is the wallet.”
As the inventory of new homes swelled, homebuilders became aggressive sellers, offering swimming pools, washers and dryers, moving expenses, free lawn maintenance and other incentives valued at tens of thousands of dollars. Builders are even offering commissions to real estate agents of 6 percent or more. Individual home sellers could hardly compete.
“Builders are giving away all kinds of things to the buyers and the agents,” said Geri Monticelli, an agent for Prudential America Group Realtors. “Resale homes have to be able to compete. If a person is trying to sell a home and a new home is built in the same subdivision, it is difficult to compete with the builder.”
When Henderson Councilwoman and real estate agent Amanda Cyphers listed her home in July, she offered to throw in a 60-inch television. She sold the home in eight days.
“I think that gave us an edge,” Cyphers said. “When there are 22,000 houses on the market, you need to look at what is it going to take to make it stand out.”
But sellers can’t go overboard. Mortgage lenders typically limit the buyer to accepting incentives of no more than 3 percent. Other enticements have to be handled outside of escrow, agents said.
Will Roan of One Source Realty said one particularly effective incentive is the seller’s offer to assist with the down payment for buyers who need initial help but can afford the mortgage payments.
The practice of offering exotic incentives is more common in Florida and the East Coast than it is in Nevada, said Ron Haze, a broker with Century 21 Moneyworld. Haze called such incentives “flash and sizzle” that won’t woo savvy buyers. He said a more traditional incentive such as contributing to closings costs is more effective, but there is one incentive that works best.
“Pricing the home correctly is better than any incentive you throw out,” Haze said.
Indeed, some sellers are simply pricing their homes too high, agents said.
Rheinberger said those sellers would rather turn to incentives than lower the price of their home as a matter of pride. They have their own idea of what their home is worth and don’t want to go below that mark, even if they have owned it for several years and will profit handsomely.
“They want to tell people at cocktail parties how much they made on their house,” Rheinberger said.
Brian Wargo can be reached at 259-4011 or at firstname.lastname@example.org.