Homeowners dream up extreme incentives to bait home buyers
By J.W. ELPHINSTONE
AP Business Writer
NEW YORK (AP) — Frustrated as her house languished on the market for three straight summers, J.J. Rodgers is trying a new sales tactic: giving the two-story home away in an essay contest.
Already, she’s received more than 500 entries — each essay requires a $100 entry fee — for her four-bedroom home in Red Feather Lakes, Colo. She’s hoping for a minimum of 2,000 entries, or $200,000 in fees, by the May 25 deadline to pay off the mortgage, cover closing costs and have a little left over. Rodgers last listed the property at $169,000 after cutting the price three times.
“We don’t have anything to lose,” Rodgers, 45, said. “If we’re unsuccessful, at least we did something different from what we’ve already tried.”
Rodgers isn’t alone in turning to unconventional sales incentives to unload her house. Aside from cash, home sellers across the country are giving away luxury cars, homeowner warranty plans and furniture to entice buyers.
Once upon a time, the crazy offers came from buyers who bid prices to astronomical heights and waived inspections and contingency clauses in sales contracts. Now, as homeowners compete with record high supply from foreclosed homes and builders’ discounted inventory, the shoe’s on the other foot.
The inventory of existing homes on the market rose in January to a 10.3 months supply, meaning it would take that long to unload existing inventories, while the supply of new homes increased to 9.9 months, the longest period in more than 26 years.
The glut has battered sales volume and prices. Sales of existing homes dropped to the slowest pace on record in January, with the median price sliding to $201,100. New home sales in January also fell to the slowest rate in nearly 13 years and the median price tumbled to the lowest level in more than three years.
To avoid getting lost in the crowd, homeowner incentives vary widely. One Colorado homeowner offered a club membership and golf lessons, worth about $4,000, on his $349,000 house on a golf course. Another seller in the state is willing to part with his tractor and pickup truck to remove snow around his home on 40 acres.
Daniel Lasnick, a real estate attorney in Stamford, Conn., recommends discussing deals involving quirky incentives with a real estate lawyer. Depending on the incentive, a side agreement may be needed. Additionally, Lasnick said a buyer may want to consult with an accountant, especially regarding any contests.
“If you’re a winner and it’s a prize, you’ll have to pay income tax on the house. It’s no different from winning a lottery,” he said.
Once a popular arrangement in the 1980s and 1990s, owner financing is back in vogue as banks shy away from making home loans to anyone except the most creditworthy. Greg Winfield, who runs the web listing service OwnerWillCarry.com has seen a recent increase in owner-financed and lease-option properties for sale, especially in California and Arizona.
In owner-financed sales, sellers lend all or part of the money needed to purchase the property. Often, the mortgage payments are held in an escrow account and a real estate attorney arranges the transaction.
“People are offering all kinds of goofy things to get their houses sold,” said real estate agent Allen Butler in Surprise, Ariz. “But what gets a house sold really is going to be based on price and price alone. The incentives, they can attract traffic and interest.”
Buzz was all Bob and Ricki Husick needed to sell their Wexford, Pa., home using a unique incentive. In October, the couple advertised that the buyer would get the purchase price back upon the pair’s passing. The heirless Husicks added a bonus offer: The buyers could inherit the couple’s retirement home in Arizona, worth about $500,000, too, if they agree to care for the Husicks in old age.
After vetting more than 100 offers following a flood of media attention, the couple found a buyer 80 miles from their two-story colonial and plans to close before the end of April. They will receive their $399,999 listing price. The buyers haven’t counted out the offer to look after the Husicks during their twilight years, but both parties realize circumstances could change in the interim.
“The house is sold. They’ll get the money back. That part’s a done deal,” Husick, 55, said.
Rodgers and her husband, Wes Ludlow, hope their essay contest will be another success story. The couple, who have five children, decided to sell the Red Feather Lakes home, their second house, to free up money to pay for college. They own another home in Fort Collins, Colo., about a 45-minute drive away.
“I think the trick to the essay contest is if you can’t get the story out there and keep it out there, it’s not in forefront of people’s minds and they forget about it,” Rodgers said. The couple recently extended their deadline to May from March 25 to give people more time to enter.
Built in 1982, the home sits on a quarter acre and boasts a wraparound deck, two fire stoves and a new hot water heater and pressure tank. County records show the home was valued at $171,900 at the end of last year.
A Fort Collins title company will prepare the paperwork to send to the winner ahead of the closing date. All entry fees are held in escrow until closing when the title company will wire funds to the couple’s mortgage company. If they don’t receive enough entries, they will send the money back to the entrants.
Rodgers and Ludlow asked for volunteers in the Red Feather Lakes community to judge the essays. They found nine unrelated people, including a local attorney and a small business owner, to choose the winner. The essay is open to any subject and limited to 500 words. They have received essays from as far away as Hawaii accompanied by family photos and personal letters.
“I’m blown away by people’s creativity and intelligence. I feel honored to read these people’s writings,” Rodgers said. “It’s like this big story quilt unfolding in front of us.”
Published in The Messenger 4.30.08