Home Buying in 90045>Question Details

Christine, Home Buyer in Los Angeles, CA

Giveaways vs. Money Off of Closing Costs

Asked by Christine, Los Angeles, CA Tue Nov 6, 2007

I have noticed that some of the longer sitting homes are now offering giveaways. One I saw offered a flat screen t.v. if sold by a certain date. Another is offering 2 round trip tickets to Hawaii if sold by a certain date. I am wondering why the seller doesn't offer the amount of money they are spending towards a gift as money towards closing costs. The closing money would be more of an incentive to me but I thought maybe there was some reasoning behind this.

Christine
~ the still hopeful first time buyer :) ~

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Answers

11
Christine, The gimmick worked. Your first 3 words in the More details section were "I HAVE NOTICED"

That is all those giveaway gimmicks needed to do. Make a potential buyer NOTICE!

When there are 10,000 competing homes for sale and only 500 buyers. It is the flamboyant, the loud, the innovative that will get noticed. $2500 off of a 500,000 house --- snore zzzz snore. But throw in something special and its wake up time.
By the way, a flat screen and L.A. to Hawaii, -- I'm beginning to fall back asleep here. How about a trip to Borneo ! or a Vintage Ford Mustang.or T-Bird?
4 votes Thank Flag Link Tue Nov 6, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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There are a few different possibilities. First, price is negotiable. If they lower the price by the cost of the trip to Hawaii, the house isn't any different than all the other houses in that price range. It's not special anymore. The trip is just a gimmick.

Second, the bank will only allow a certain amount to go towards the closing costs and again, this is negotiable between the buyer and the seller as long as the bank approves. Some loans you can wrap the closing costs into the loan. So to the buyer, they are actually paying for a trip to Hawaii with a slight increase in their monthly mortgage payments.

A third possibility is a developer is able to buy trips to Hawaii and flat screen TVs in bulk at a discount. But that doesn't matter to you. Negotiate what YOU want and use full retail prices to say, "Now I want $2500 towards closing costs instead of the gimmick."

Good luck,
Ruth
1 vote Thank Flag Link Tue Nov 6, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
There are many reasons why someone would offer gifts versus cash at closing. Some are give aways that are given to REALTORS as incentives. The novelty of something a buyer might like is also a reason. Communicate with your REALTOR about needing help with the closing costs and you might be pleasantly surprised what can happen.

Good luck!
0 votes Thank Flag Link Wed Nov 7, 2007
I recently saw the seller of a house in the bay area offer a new mercedes to the buyer at closing.
0 votes Thank Flag Link Wed Nov 7, 2007
Hi Christine,

Yes, this is a gimmick!!! We are seeing a lot of these where the sellers and the Realtors are trying to get their listing to stand out.

Does it work? Rarely. You notice, but do you buy? Price & condition still rule. If they really want to sell they need to price below the competition.

If you find a property you would like to purchase with one of these incentives, you can always offer a lower price if lieu of the incentive. Or you could ask that the incentive money go towards closing costs, but check with your lender first. Many lenders limit the amount of closing costs that can be paid by the seller.

Karen Miller
0 votes Thank Flag Link Wed Nov 7, 2007
The gimmicks are to get your attention. Most people would negotiate the gimmick into the price or use the cash to lower the price or put towards closing costs. They are just trying to peak your interest and get your attention. In this market sellers are desperate to stand out from the other homes listed that have the same qualities and ammenities. That is called thinking outside the box.
0 votes Thank Flag Link Wed Nov 7, 2007
Christine:

Here in the Inland Empire builders are offering large cash incentives to the buyer and some to agents. The buyer can use the monies to buy down the interest rate, help with closing costs, help with down payment or use for upgrades.

(Realtors are using the incentives to pay bills and buy food.)

Great Luck to you!
0 votes Thank Flag Link Tue Nov 6, 2007
I agree with your confusion. We are seeing more and more of this. I wonder how it will pan out. I agree with G, turn down the 'perk' and go for the discounted price or seller concession. See if it works.

It might be the seller or agent has the hook up on on these 'perks' and they won't cost them as much as a deduction in price or seller concessions to buyer.

Maybe, someone who is offering these types of perks will chime in with some insight.
0 votes Thank Flag Link Tue Nov 6, 2007
Because the sellers are stupid. If they were smart- they would lower their list price.
0 votes Thank Flag Link Tue Nov 6, 2007
It sounds as if they are trying to attract agents to bring buyers. My personal thought is to reduce the price to make it attractive for the buyer and agent. I always like to focus on my clients needs and not the pocketbook of the agent.
0 votes Thank Flag Link Tue Nov 6, 2007
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
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If you find a place offering a trip to Hawaii, make an offer, and suggest that instead of the trip you would rather have the money....I bet the seller will go for it.
0 votes Thank Flag Link Tue Nov 6, 2007
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