Saturday, September 23, 2006

Digging Deeper into their "Bag of Tricks"

From the LA Times:

Stopping short of installing glue traps to ensure that prospective buyers can't get away, sellers, builders and real estate agents have been reaching deeper into their bag of tricks in their efforts to move the ever-increasing homes-for-sale inventory...

Greg Paquin of the Gregory Group of Folsom, which provides market research and consulting services to the new-home industry, has seen builders in the Sacramento area offer free trips to Las Vegas, home-entertainment systems, gift certificates to local furniture stores and an annual membership in the golf club...

Cars, TVs, free vacations -- does it really make sense to do business this way? Not from a buyer's property-tax perspective. If the value of the car being given away is $40,000, why not just lower the price of the home by that much and be done with it? After all, the new buyer will be paying property taxes based on the purchase price of the home. The lower the purchase price, the lower the annual tax bill.

4 comments:

Anonymous said...

My guess is how it figures into their (new home builders') earnings reports. I think the freebies are written off as maybe promotions, whereas actual discounts off the price is written as revenue. The builder stocks have been beat up this year and probably can't take anymore of a beating. But I do agree with you: what is going to draw me as a buyer in is the asking price. To me, it seems as if some of these "gifts" are white elephant gifts anyways. The builders are offering luxury cars or vacations and also, $800/mo for the first year interest only payments. If they sucker that family in, knowing that they can't even afford a 30yr fixed, how can they possibly afford the insurance on that luxury car, or have the cash to spend on their vacation?

tom stone said...

i signed on to zip realty a week ago,and gave a bad phone #.i have since recieved 15 e mails from my local realtor pete coronado,and a message on my answering machine...which is an unlisted #!!!i marked the box saying i was interested in buying,which i am AFTER the market corrects...i sent this turkey an email suggesting that he stop blowing smoke up peoples a$$es,and get honest,which works better in the long term,and that if he was fool enough to believe what his emails said about BUY NOW he should educate himself,and i gave him some links.....i'll give 5 to one odds i never hear from him again.

Anonymous said...

Actually, the recipient of the $40K car willprobably find a 1099 in his mailbox come Jan-07 and owe taxes on it.

Anonymous said...

One Lincoln/EDH builder has taken the Pulte ("resale consultant") thing a step further... They will take your old house in TRADE, like a used car! Supposedly they will BUY YOUR HOUSE at market value (whatever that is!) if you buy their house!