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Detroit News Article
printed July 7th, 2006




 

 

Competition for scarce buyers forces sellers to get creative

by: Dorothy Bourdet / The Detroit News


Buy a condo from developer Louis Beaudet in Ypsilanti, get $3,000 paid on closing costs and a new washer and dryer.

Buy a house from Hornbrook Estates subdivision in Lyon Township, get a free two-year lease on a four-wheel-drive Dodge Dakota pickup.

List your house with Realtor Mark Beydoun, get an extra sign in your yard touting no-money-down financing.

The perks don't end with buyers. Courtney Tursi is offering a two-year lease on a BMW X3 SUV to any real estate agent who finds a buyer for her $699,999 house in Commerce Township.

Real estate agencies, Realtors, builders and even home sellers are pulling out the stops to counter one of the slowest housing markets in Michigan history, where homes for sale are a dime a dozen and home buyers are gold.

Competition for those scarce buyers is forcing the real estate industry to come up with new ways of doing businesses, from giveaways of gas and vehicles, to 99-cent upgrades on new homes, to full payment of the buyer's closing costs.



Even home sellers are getting some breaks in this competitive environment, through Web sites where real estate agents will compete for listings

Mark Beydoun, a Realtor with RE/MAX Team 2000, just bought a bundle of yard signs advertising zero-down financing for homes.

"It might give them pause and (they will) say, 'I didn't know I could get zero down,' " he said.

Sterling Heights agent Jason Strat has mortgage information on nearly all of the signs for his resale listings. They provide one-stop shopping for potential buyers, he said.

"It's becoming more visible mainly because there are more homes on the market," he said. "In the past, these homes didn't stay on the market too long, so these signs weren't necessary."

Real estate market hit hard

At the suggestion of her Realtor, Furhad Waquad, Courtney Tursi decided to give away a two-year lease on a new BMW X3 to the real estate agent who finds a buyer for her $699,999 house in Commerce Township.

She figures it could reel in agents and the potential buyers who come with them.

"Whether or not they're looking for a house like this, it will increase traffic and the more traffic you have, the more people seeing your house, the better off you will be," Tursi said.

Unusual incentives like the BMW lease are symptoms of how the state's sagging economy and low consumer confidence are sapping the real estate market, said Waquad, a Realtor with Real Estate One in Bloomfield Hills and president-elect of the Michigan Association of Realtors.

"We are a single-state recession in the United States, real estate-wise. Our real estate market has been affected so much because of our manufacturing base," he said. "We are a product of how confident the consumer is in the market, or lack thereof."

Builders also offering perks

Whether with 99-cent upgrades on new homes (such as stainless steel appliances and better carpet) or free gas, builders are also stretching for buyers. A National Association of Home Builders survey of 500 builders in January found 41 percent are offering free appliances, 31 percent are paying closing fees and 15 percent are paying up-front financing.

BRG Custom Homes just completed a stretch where it offered $3,000 in free gas with the purchase of a Rivergrove Village Condominium in Ypsilanti Township.

"The market being what it is today we decided to spice it up a little bit. Who can't use $3,000 worth in gas?" said Louis Beaudet, a principal with the Southfield-based developer.

The eye-catching ads brought in foot traffic and one buyer, Beaudet said. Now the company is offering to pay up to $3,000 in closing costs in addition to throwing in a free washer and dryer.

But Beaudet predicts the flurry of incentives will be short-lived.

"We're doing a disservice to ourselves as an industry because we're artificially deflating the price of our homes," he said. "Homes need to sell on virtue of their quality. I believe that as the market corrects itself, you will see the incentives diminishing across the board."

In Lyon Township, slowing sales of new homes in the Hornbrook Estates subdivision has prompted developers to sweeten the deal. The next person to buy a ready-to-go home will get a free two-year lease on a Dodge Dakota pickup.

"The truck is not going to make somebody buy the house, but it is a nice little incentive," said Faye Armstrong, sales manager for the subdivision.

Sellers turn to the Web

Home seller Matt Bontomasi switched the tables on incentives, with the help of a recently launched Web service. Bontomasi posted details about his 1,100-square-foot St. Clair Shores ranch on HungryAgents.com, a Web service where real estate agents "bid" for sellers' business with their commissions.

Realtor Tony Dabaldo offered and Bontomasi accepted a 4.5 percent commission, versus the typical 6 percent. The house sold in seven days for $165,000, just $4,000 less than the asking price.

"I wanted to get a discount on the commission, but I wasn't going to go with an inadequate agent," he said. "For me, it was excellent. I got a discount on the commission, I got hooked up with an excellent real estate agent and I was able to sell my house in about a week for almost the asking price."

For Dabaldo, earning a loyal client and the referrals they may bring is more important than a one-time commission.

"The referrals alone outweighed (the cut in commission) and I know he's going to be a customer for life," said Dabaldo, a Realtor for Utica-based RE/MAX Metropolitan. "That's what it's all about."

Saving on the commission is especially attractive now for sellers, many of whom will have to bring money to their closing because they're accepting offers for less than they owe on the house.

"Across the country, about 40 percent of sellers will have to bring a check to the closing table," said Jim Tullman, general manager and chief marketing officer for Missouri-based HungryAgents.com. "Because of that, they need to save money on the sale of their property and if they can save thousands on the commissions, that helps them pay part or all of the amount that they would need to bring to the closing table."

Those looking to unload their houses quickly are increasingly looking at house auctions.

An auction offers a quick sale -- the pre-auction process takes five weeks and bidding usually lasts five minutes -- and a competitive bidding process.

"It works very well not only for the buyer but also for the seller," said Gary M. Berry, owner of Gary M. Berry Auctioneers in Rochester Hills.

Agents also choosy

Other strategies real estate agents are employing these days: Being choosy about the kind of homes they list and making sure they have a strong Web presence.

Beydoun won't take on clients who insist on selling their house for a certain amount when the market won't support that price. "If I know it's not going to sell, I won't take the listing. I won't make myself look bad."

Cathy Tishhouse, a Realtor with RE/MAX Showcase Homes in Birmingham, is trying to beef up her presence on the Web, where home sellers often go to do research before calling an agent.

"You'll see more and more people, I think, looking at what they can do on the Web."

Views of market differ

Depending on their vantage point, sellers, Realtors and builders have varying views on where the market is going.

"People kind of lost faith in the real estate market," Beydoun said. "The bright spot is I don't think it can get any worse."

For Tursi, who is trying to sell her home, the market is "horrible."

"It's like the last person out of Michigan shut the lights off," she said. "People are leaving and there's nobody coming into the market. Somebody's gotta do something to bring the jobs back here. (People are) all putting their house up for sale because everybody's bolting."

But developer Beaudet is optimistic.

"I'm very positive, but I'm disappointed to see how negatively the state of our economy has been taken by our target market. People are doom and gloom, and it's just difficult.

"We can decide whether our cup is half-full or half-empty."

You can reach Dorothy Bourdet at (313) 222-2293 or dbourdet@detnews.com.

 

** all photos courtesy of the Detroit News - copyright 2006**

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