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Incentives attempt to lure-in buyers

The slowing housing market is fueled by the fact that there are just too many homes for sale on the market, and nobody wanting to buy them.

It seems as though potential buyers are just waiting around for prices to drop, since they know that people will soon become desperate and forced to lower their asking price.

This is exactly why both homebuilders and homeowners are offering incentives to lure home buyers in. These incentives range from things like season ski passes to upgrades on appliances. The options are endless.

An August 25, 2006 article by Les Christie of CNNMoney.com, “Freebies for home buyers,” explains how just about everyone is using a variety of tactics top entice buyers.

“As the real estate market slows, sellers seem willing to try anything to close a deal. ‘Incentives are all over the place,’ says Salli Kirkpatrick, founder of SK Associates, a Sacramento-area advertising agency that works with homebuilders. ‘No closing costs, no payments for six months, $10,000 toward a built-in swimming pool. Things have gone berserk.’”

Although homeowners are also offering their own incentives, this new trend is most apparent in the home building industry, where experts estimate that over 75 percent of builders are now offering some sort of incentives to market their newly-built homes.

Some of these incentives include upgrades on appliances, landscaping, electronics and just plain old cash.

“Other popular options include fancy kitchen cabinets, granite countertops and marble baths. Some buyers, however, may just want money - and those deals abound. ‘Price cuts are averaging 5 percent to 6 percent,’ Seiders says, ‘and 30 percent of all the large builders have cut prices in at least some of their developments by 10 percent or more.’”

One of the key incentives some homebuilders are providing right now involve the mortgage. Interest rates have been inching up; so many people are going to grab hold of any discount they can get concerning their mortgage.

“As mortgage rates inch higher, some builders eager to move inventory may help in that area too, says Seiders. That could mean a 4.5 percent interest rate for the first year and 5.5 percent for the second on a 30-year fixed-rate mortgage, instead of the going rate of about 6.5 percent. That would save a total of $6,828 on a $300,000 loan over the first two years of ownership.”

While private homeowners can’t really help on mortgage costs, they are offering incentives of their own.

“An area broker, Peter Workman, said other sellers were offering a month of massages and a personal chef for a while. Matthew Martinez, a real estate investor in Boston and Florida, says a private seller wanted to give him a 20 percent discount for a quick house sale. A condo owner in Miami was throwing in a Vespa, the Italian motor scooter. Another Miami house seller would have included round-trip air within the continental United States with the sale.”

Whatever the prize may be, most people are finding that discounts on the price of the home are what are attracting the most buyers.

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