“All That Bubble Talk Isn’t Coming From Nowhere”
The Record reports from New Jersey. “When the housing market gets tough, sellers offer incentives. In Demarest, builder American Properties of Iselin is offering to park a Maserati (worth about $125,000) in the garage for any buyer who forks over $2.2 million to $3.6 million for a new luxury town house in a 34-unit complex in a French chateau style.”
“Offering the car is better than simply cutting the house price by $125,000, said spokeswoman Karen Kessler, because ‘our buyers are not looking for a bargain; they’re looking for some pizazz and some excitement.’”
“Incentives are popular for a number of reasons. For one thing, they are a bit more dramatic than the standard price cuts, although many sellers who use incentives also have cut prices.”
“But incentives can be easier for builders to swallow. ‘The fact that they’re giving back $10,000, $20,000 or $30,000 in extras somehow seems a little more psychologically palatable than taking down the $500,000 sign and putting up a $470,000 sign,’ said Michael Schonberger, an adjunct professor of real estate financing at Rutgers University.”
“At the Bellaire project, seven of the 34 town houses have been sold since the sales office opened last spring. Several would-be buyers are being held up because they can’t sell their own houses, said Deborah Deck, project director.”
“Occasionally an individual seller gets in on the act. In Bergenfield, for example, the seller of a raised ranch recently began offering to pay half the buyer’s property taxes for two years. ‘If a seller needs to sell, why not offer something to attract a buyer?’ asked real estate agent Lourdes Garcia in Englewood, who is listing the house for $429,999, down from the original asking price of $459,900.”
“The taxes on the three-bedroom house are high, she said, more than $12,000 a year. So offering tax relief seemed to make sense. But so far there have been no takers.”
The Press of Atlantic City. “The region is seeing more sheriff’s sales. New Jersey has seen 23,272 foreclosures so far this year, or about 63 percent more than all of last year.”
“Cape May County Sheriff John Callinan’s office has sold 114 Cape May County properties at auction through November compared with 95 all of last year and 91 in 2004. Ocean County, too, has seen more auctions: 150 so far compared with just 99 in all of 2005.”
“The downturn in the real-estate market has scared off most speculative investors at sheriff’s sales. ‘It went from competitive to cutthroat. Now the market is starting to drop down,’ said Ocean County Undersheriff Wayne Rupert. ‘Almost all of the properties we’ve sold have gone back to the bank or lender. The local investors are holding off until values level off.’”
The Hartford Courant. “In Connecticut, business has slowed considerably from the hectic pace of recent years and prices have flattened in many areas. Home construction is slowing. Now, there’s a new specter: foreclosure.”
“Foreclosures in Connecticut climbed 9.7 percent, to 3,514, between April and June, compared with the same three months in 2005, according to the Warren Group. The dreaded f-word can send a shudder through anyone who lived through the most recent recession in Connecticut. In the early 1990s, foreclosed property selling at a discount helped contribute to plummeting home prices at a time when there was a glut of residential property for sale.”
“‘People’s ability to pay is being stretched,’ said Donald Klepper-Smith, an economist in New Haven. ‘A lot of people are overextended, and it’s very easy to get into a foreclosure situation.’”
“More than any other time, the past five years have seen the proliferation of all kinds of mortgages that permitted borrowers to put little cash down and stretch their budgets to get them into a bigger house than was perhaps wise.”
“And with flat prices, it’s now tougher to refinance, especially if homeowners have already tapped into equity for improvement projects or college tuition bills.”
‘Massachusetts shoppers are expected to play it closer to the wallet this year than many of their counterparts across the country when it comes to holiday gift-giving. It’s predicted that falling home values will continue to factor into what Massachusetts families are willing to spend this season.’
‘Let’s face it: For most families, their wealth is in their homes, and the housing market has rocked their confidence a bit,’ said Jon Hurst, president of the National Retail Federation. ‘And there’s now the related concern of increasing interest rates.’
Got a new post up! Some EXCELLENT insider perspectives from an honest appraiser. Some of it will really surpirse you…
SoCalMtgGuy
http://www.housingbubblecasualty.com
http://www.housingbubblecasualty.com/forum
Nice Post;….Gotta read this HD…..
Losing friends by telling the truth. There has been a lot of that going on in the past few decades, and not just in real estate.
You don’t lose when you lose fake friends.
they have their negative savings to help boost their wealth too……..
don’t forget that
I don’t think of it as negative savings. I choose to think of it as Asian savings.
I’m sorry — $3.6 million for a townhouse in Jersey? You’d have to give me more than a Maserati to go with that one. Throw in a jet, maybe we’ll talk.
At least it’s not a Focus.
Forget the pizazz and excitement, I want a lower price.
I’ll bet the Real Estate agent puts 10k miles on the car before it get “put in your garage”. Effectivly having the car lose about 30-40k in value.
Not to mention that all 34 of your neighbors will have a Maserati as well. Wont they all look so cute together washing their cars on a nice day.
Ben,
Thanks for the Jersey exposure, it’s not often that we get much headline space when it comes to the bubble.
Caveat Emptor!
jb
New Jersey Real Estate Report
http://njrereport.com
Don’t forget, NJ has the nation’s highest property taxes. Taxes in Bergen County, where these units are located, are among the highest in the State.
A new $3.6 million home will probably run you $30k - $40k per year in property taxes
Also the nation’s highest car insurance rates. No small matter when you’re getting saddled with a Maserati along with your $3 million house!
Even more ridiculous, you are now going to be paying property taxes on that Maserati. The tax assessor is going to base the assessed value of these places on the sales price & comps in the same development.
Not only are you now financing a car for 30 years, you are paying high property taxes on an artificially inflated home price. You could probably drop your property tax bill by $2,000 per year by just dropping the price by $125k. How is that for pizzazz and excitement!
Probably not real cheap insuring that Maserati, either.
AND - it’s a townhouse - surely they only have two car garages. And the Maserati isn’t going to be you or wifey’s daily driver, right? So the Suburban or the Lexus gets parked in the driveway?
Demrest is a nice area. Ridiculously overpriced as is most of Bergen. But especially demarest/Cresskill/Rockleigh/Englewood etc etc. And don’t even mention Alpine- there’s a few odd shacks around the edges of Alpine that are probably all that prevents it from being the highest priced zip code in the country.
But the taxes i think are even higher than you estimate.
Demarest #s:
Year: 2005
Tax Rate: 1.95
Average
Residential
Assessment:$655,468
Average
Tax Bill:$12,812
Don’t know how or if they screw with the millage , but 1.95 on a 3.6MM home would run $70,000. Again , maybe there are adjustments up at that level or something? Don’t know. But I do know that in Englewood , Eddie Murphy’s place over on East Hill is up for sale at $22MM with taxes of just over $250K according to a realtor friend.
You are probably right. Also, according to the NJ Constitution, there are no adjustments. Everyone pays the same tax rate across the board.
The only adjustment would be if the town hadn’t been assessed in a while. Then the values of the new home would be adjusted down to bring it on par with the old homes (i.e. what would this house have sold for at the time of the last assessment).
However, with a tax rate of 1.95 and and an average assessed value of $655k, it sounds pretty recent. $70k is not out of the question.
“Don’t forget, NJ has the nation’s highest property taxes. Taxes in Bergen County, where these units are located, are among the highest in the State.
A new $3.6 million home will probably run you $30k - $40k per year in property taxes”
http://tinyurl.com/ybf3zo
Taxes listed on Page 2 at bottom
Manlius, NY
$1.25 mil home=$36k taxes/year
Course that is based on the last sale price so expect those to go higher after the sale.
Ocean County Undersheriff: “Almost all of the properties we’ve sold have gone back to the bank or lender.”
My question: what is the easy way to identify REO’s? If I am just looking at some MLS listing, is it likely that a bunch of the listed properties are REO’s and I just don’t know it?
az;….Yes…It is likely that some of the listings on the MLS could be REO’s….Brokers will establish relationships with the lenders to market their REO’s @ discount rates in return for exclusive rights to market the all the REO’s in thier geographic region…
That’s was what happened to us. Only when we submitted an offer did we find out the seller was a bank. Fortunately they rejected it because we wanted a 75 day settlement, to coincide with our Florida settlement. Then we went back with a more aggressive (lower) offer with an end of month settlement and no contingencies except home inspection. They took it. They even paid for an owners title insurance policy, that’s how much they wanted to be forever clear of the property. Banks DO NOT want to hold their foreclosed properties. They definitely don’t want to become landlords.
Banks definitely DO NOT want to become the FB’s holding a falling knife as it drops all the way to the ground, either.
Won’t the county recorder have the Bank listed as the current owner? you can check that for the listed property to see if its an REO.
Good point, I might try that if I am trying to find out about a specific property. Thanks to the rest of you for yr answers too.
County recorder is at least a month behind the actual recording at least in my hood….
If the acronym for bank owned real estate was BORE, I think people would be able to identify the status of the property more easily.
‘our buyers are not looking for a bargain; they’re looking for some pizazz and some excitement.’
People are stoopid.
Agreed, some other words
“A fool and his money are soon parted”
“It is a crime to let a sucker keep his money”
“there is a sucker born every minute”
“A fool and other peoples’ money are even sooner parted”
Or “A Fool and his money are soon partying”
We’re ALL stupid from time to time. However, its easier to be stupid when your pocket is full of cash and you can “see” that what you’re buying is going to continue to go up in price.
These gimmicks will attract the marginally, ridiculously, “stupid” buyer but as money gets harder to acquire and people find it harder and harder to “see” prices going up…….the number of “stupid” people will decline. This is just a classic interim scheme conjured up by “smart” people who think they can get around the fundamental (bad) facts their business is facing.
As they rapidly fail they’ll be abandoned and the next leg down will gather steam. Then you’ll get a “dead cat bounce” which will appear to be a “bottom” but will only drive more inventory onto the market and, again, drive the market down to its REAL bottom. This is where sellers are “all in”, desperate, despondent and (finally) resigned to just getting out.
As for me, I’ll take the boredom of a lower price.
Yeah, I don’t even believe that the marketeers think the incentives will work better than price reductions. It’s probably more about preventing other recent buyers from screaming or cancelling.
“Occasionally an individual seller gets in on the act. In Bergenfield, for example, the seller of a raised ranch recently began offering to pay half the buyer’s property taxes for two years. ‘If a seller needs to sell, why not offer something to attract a buyer?’ asked real estate agent Lourdes Garcia in Englewood, who is listing the house for $429,999, down from the original asking price of $459,900.”
You know what would really attract me? If you lowered your price so that I’d save on property taxes forever, not just two years.
(I know, property taxes don’t go directly off sales price in many/most places, but there is at least an indirect effect.)
passthebubbly,
Oh absolutely. Same goes for that brand of offer on HOA’s, maint. fees etc. There have been several recent articles where realtors have noted that it’s especially hard to market properties where taxes are high and maint. fees/HOA’s were structured in an era when “money was no object”. This is what my wife and I constantly scratch our heads over. For cryin’ out loud, even if we “could” afford to buy the POS outright there would in many developments still be $600-800-1,000 a month just in taxes and fees!
One golf community we looked at had $400-500 in HOA’s and silly me, I was evidently under the mistaken impression that this in some way included “some” use of the golf course! Oh, no that’s a totally seperate expense! Oh and there was an additional $90-120 a month in “maint.”. Really?
There was a golf development near our old house where the homes were really nothing special and certainly not cheap……if you wanted to buy a house there you would have to add a $33,000 mandatory SOCIAL membership to the community Country Club plus yearly food and beverage minimums…..of course you may also want to play golf…$$$$$…..How hard is it to sell a property that looks like all the others around you with that kind of albatros around your neck.
Taxes are based on ASSESSMENT which is calculated by current market value. Buy a house for $100k and taxes are calculated at that base. Fast forward where comps dictate a value of $500k and taxes are adjusted accordingly. So…..the selling price DOES have a most definate effect on your taxes.
Here’s the kicker….and people don’t take the time to take advantage of it. When prices DECLINE, so do your taxes….IF you challenge the assessment and provide comps to backup your case. People usually just get the bill and think that’s what they have to pay.
Anyone who has a house and it’s value is taxed at “top dollar market” prices should watch their bill over the next few years and make their case to have their tax bill lowered to match the market.
Now, some states have Homestead Exemption in some form or another so that’s not figured into the above scenerio. In Louisiana, for instance, the “good ‘ol boy” Tax Assessor might give a wink and a nod to keep your assessment low where the Homestead Exemption cancels out most of your tax bill. I know of large expensive…for the area…..houses whose bill runs $300/yr.
That “decline” thing sort of works and not completely. In CA I bought a condo in 1994 that had earlier gone for more than twice as much. When I lodged my official complaint about the tax bill, it did fall, but not to the Prop-13 mandated level that would’ve been expected from my low purchase price. Some kR@p logic about my purchase price being lower than that of identical condos in same bldg, therefore “below market” — my recent AZ residency is a reaction to this bs among other things.
“Offering the car is better than simply cutting the house price by $125,000, said spokeswoman Karen Kessler, because ‘our buyers are not looking for a bargain; they’re looking for some pizazz and some excitement.’”
In my book, bargains are pizazz and excitement.
If you buy one of these houses at 100% financing and don’t make any payments, do you get to keep the car when the house is forclosed?
I think that Casey needs a car.
That’s just what the lender has to protect against on these cash back or incentive deals . Even the cash back deal on paying property taxes for 2 years is suspect because it’s giving cash to pay something,rather than lowering the price of the home .Again I say ,normal lenders would have a problem with this practice without adjusting the loan amount .
Lenders have never had much of a problem with sellers paying one time closing costs or allowing a small carpeting allowance/roof repair allowance etc. ,( if the appraisal comes in with the repair done ), but if the incentives or cash back start to affect the purchase price than its a problem.
For instance , I remember a deal one time where the house had foundation problems . The appraisal came in that the value was there on the purchase price only if the foundation was fixed . The underwriter ended up making the loan subject to the foundation being fixed prior to close of escrow or they were not going to give the loan amount . The buyer and seller in this case got the foundation fixed prior to close of escrow and it was signed off after being reinspected by the appraiser , and the loan was make .
A 50k car is not anything that increases the vlaue of the property in question .
The industry is taking a concept that has been around for a long time and twisting it to try to get sales which puts the lender at a greater risk than they would normally accept .
The reason Lenders use to allow a carpeting allowence for example is lets say you had a property that was worth the value except it had bad carpets . The lender would allow the seller to give this allowence out of proceeds for the buyer to put the carpeting in . Sometimes the lenders would withhold the proceeds until they could check and see that the carpets really had been put in .What do you think the crooks do , they increase the appraisal and take the cash back .
One way to spot a questionable deal is when the parties want you to sign a side agreement without the lenders approval .
We all know how these questionable deals affect appraisal comps and have contributed to housing mania BS.
Well yeah, it’s better for the sellers.
I don’t even think you can live in a Maserati, can you?
I don’t know, but think I could live in this one for a few days.
http://tinyurl.com/yy38wr
Fair enough — that one could be called a dwelling and properly financed over 30 years…
Doesn’t this deal require appraisal fraud to the tune of $125,000 overstatement of the home’s market value? We learned a couple of days ago that the builders help this process by using dealer financing which gives them control over who does the fraudulent appraisal.
This seems to be such nonsense, the $125K car in lieu of a $125K price reduction on an asset. These are people buying 2.2-3.6 million dollar residences. They have a lot of money. These people do not get rich by being financially irresponsible and accepting cars in lieu of cash reductions thereby increasing their tax burdens.
There are serious questions about how this kind of deal benefits the buyer, for sure! It makes more sense if the buyer is using no doc or another type of liar loan than if they actually had the means to go out and buy a $125K car with their own money.
“These people do not get rich by being financially irresponsible”
Evidence?
a fool and his money are soon parted
a fool and his money are soon dearly departed
Why would anyone in their right mind want to finance a car over 30 years? That $125k car is going to wind up costing you about $280.
I like the pizazz and of not paying $280 for a car.
A car that price, is a house.
I don’t get it. How can a seller give away a car with a sale? Doesn’t this mean that the appraiser has to appraise the house for more than it’s acutually worth to include the value of the car? That sounds like fraud to me. And doesn’t the bank care? They’re finincing a car that they probably would not get at foreclosure.
Thats what the problem is ,the final bagholder lender would care if they found out about the 125k car kickback ,but the question becomes how many of these deals are disclosed and how many of these deals have a inflated appraisal to cover the cost of the incentives .
If you can’t sell a house without a expensive incentive than the market value of that house comes into question .
The car or cash back to buyer doesn’t benefit the lender on the house they loaned on . It doesn’t help the lender with house value if the lender needs to sell the house in forclosure .Actual value put into the house benefits the lender .
A 125K car kickback doesn’t raise the vlaue of the house in question ,it isn’t a house improvement .
All the bank has to do is to READ the builder’s ADVERTISEMENT in the paper to see that the $125,000 car is INCLUDED in the sales price of the house. But NOOOOOOOO…. the bank DOESN’T WANT TO SEE this… they SHUT THEIR EYES (monkey see no evil - style) to the whole situation…. as long as they get the LOAN FUNDED…. everyone makes $$$… & the bagholder at the end of this idiotic, self-made-catastrophe-waiting-to-happen… is the investor who buys these stinking loans.
Thanks.
And the builders have their “special lenders”and ’special appraisers ‘ that the buyer has to go to remember .
I would think that a buyer would want to have a accurate appraisal for property tax purpose in Ca.
Lets say a house is listed at a 120k price and the seller is giving a 20K kitchen remodel allowance in the deal . Lets say other homes with a kitchen remodel sell for that price in the area . Unless funds are withheld and that 20K kitchen remodel is actually done the house is only worth 100k .But what if the buyer takes 20K cash and doesn’t do the kitchen remodel . Now you got a 100k house with a loan on it for 120k and the buyer with 20k in their pocket instead .
The house goes into foreclosure and the lender eats the 20k
because the lender had a raised appraisal or the lender did not withhold funds to make sure the kitchen remodel was done ,or the lender was never told about the 20k kickback .
These incentives/kickbacks are just a scam to inflate appraisals and get higher loan amounts and cash in the pocket of buyers . Better to just get a lower sales price .
I remeber when you couldn’t put any NON real property on the contract
the buyers probably get a 1099 for the car
BAM !
My Maserati does 185
The bank foreclosed and now I don’t drive.
O.K now I’ve got to admit that was pretty good.
You know this whole bubble HAS had a certain maniacal twist that’s almost as if Joe Walsh himself wrote the script. He’s always had a sense of humor (and a healthy amount of skepticism) about our consumption habits. Yeah, that’s what this bubble feels like, a Joe Walsh album playing over and over…..
Joe Walsh?
Kinda datin yourself, DinOR. 
Might wanna say who this is for the younger folks here. (The smoker you drink, the player you get…Rocky Mountain Way is my fav.)
BayQT~
Joe Walsh.
I’m just shocked about banks being willing to go along with this. Not to mention the IRS has to look askew at this. 100K incentives are they income? Why is the bank paying for this? Does that make some of the interest not tax deductable?
I’ve tried to keep my portfolio steered away from companys that do buisness that way.
James,
Good for you, as do I. One might also do well to steer clear of sellers that conduct business this way too. I’ve confronted several about the tax liabilities and the usual response is well, we haven’t had anyone one ask us that before so I “guess” the taxes aren’t really a problem. Yeah, I’ll try to remember that when I’m wearing an orange jumpsuit! The only ethical response I’ve ever gotten was from a younger gal in LV that admitted she knew nothing of the tax implications and advised I seek the guidance of my CPA. Good answer!
Has anyone actually seen the new regulations have any effect on builder incentives? It doesn’t sound like they’re having any effect.
KIA,
My wife and I have done a little looking in LV and as far as we can tell they’re just moving the whole incentive program “off the books” by having them disbursed by a 3rd. party. Are you aware of any RESPA regs. that relate to this and where can I find a copy of these “new” regs?
“it’s hard to believe there won’t be plenty of people house shopping in the Hamptons in the New Year”.
Well what do you expect to hear from an agent? This is simply wishful thinking. The reality i people out in the Hamptons are scared to death and for every person who doesn’t “have” to sell, there is a wanabee who made a huge costly bet on a house for investment purposes. When the market fails - and it surely will in the Hamptons, these people will be F’d!
See , that’s just it , the deal is done off the books and the final bagholder lender doesn’t know that incentives and kickbacks were part of the deal .
Normally, the real estate agent would be required to disclose all aspects of the transaction to the appraiser and the lender. The appraiser would have to adjust the market value for the incentive(s). The lender would require this be done as they would have to package the loan and sell to the secondary market.
Issues:
The real estate agent has commited fraud by not disclosing incentives
The real estate agent has violated licensing in most states by not disclosing
The appraiser has committed fraud by not disclosing (if he/she in fact knew)
The appraiser has violated licensing in most states if not adjusting for incentive in Sales Comparison Approach (market approach) to value.
The lender has failed in its fiduciary duty and warranties tot he secondary market purchaser(s) by not completing due diligence in regards the listing and sales information.
The lender has commitied fraud if he/she knew of the incentive and failed to adjust loan amount before selling to secondary market.
Now the question is whether any of the thousands of agents, lenders and appraisers will ever see jail time. I doubt it.
All of the accused are oblivious to the points you just made. All of them will say they were just doing what everyone else was doing, and they will be correct. We currently have a regulatory vacuum in the lending industry, plain and simple.
The subject of kickbacks really gets my blood boiling . Just because the builders overbuild and the speculators/flippers drove up the prices ,now these sellers and the real estate industry think they get to play games with the appraisals and incentives and kickbacks at the expense of the lenders ,comps in the area , community taxes ,etc. Who do they people think they are ? Talk about a feeling of entitlement . Desperate or greedy people do desperate greedy things when markets turn bad because they think they are entitled to break the law . F–K THEM
The problem of these kickbacks brings up a much larger issue than what has been stated here. DinOR was gettting close when mentioning the Joe Walsh. The problem here is the outright corruption. Obviously the IRS, FBI and the Feds don’t really care because this housing bubble has inflated the economy. Addtionally, there has been no critical mass of outcry from groups or powerful-enough individuals for a crackdown on this kind of deal. Unfortunately, when these bozos who thought they were getting a deal because they were getting cash back or taxes and/HOAs paid for 2, 3, or whatever amount of years start crying to the gov’t and the MSM, then we’ll see some action. As usual the people who make the decisions in this country will be in reactive mode, rather than proactive. This should have been stopped the first time it happened. Turn back the clock to 2005. Oh, you want to throw in a Maserati with that home loan, off to jail with you. A few of these cases and the whole thing would have stopped cold.
As an aside, I grew up in Bergen County, NJ in the 70’s and 80’s, we always rented 2-family homes, which was okay. However, reading that taxes are now as high as 30-40K/year, I have to ask, who in their right mind would want to live there? For 3-4K/month in tax I better limo service to work, private tutors for my kids, and maid/chef service at my house. Also, I am sure that for many of these people who live in these high-priced areas, you can also add HOAs and all sorts of other fees. People can laugh all they want at people like Warren Buffet, but I guarantee he is not shelling out all that kind of dough for crap he doesn’t ever see. I am sure Omaha, NE is nowhere near Bergen County, NJ in those terms. But, as you guys have already mentioned this morning, “A fool and his money are soon parted.”
The moral cost of loose money.
http://www.prudentbear.com/internationalperspective.asp
“However, when the stock market bubble burst in 2000 it didn’t wholly deflate. Instead, interest rates remained far below normal historical levels and, we know now, were driven down still further by a Federal Reserve that was operating off false inflation data. After 2000, the bubble that had before that date been largely concentrated in the United States, the stock market and the tech sector became through the magic of globalization spread throughout the world, with borrowing rates for even the dodgier emerging markets falling to unprecedentedly low levels and real estate prices soaring worldwide.”
Luckily, the rate of stock market gains has apparently reached a permanently high plateau.
I have to ask, who in their right mind would want to live there?
People looking for “pizzazz and excitement”, no doubt.
The party in the Hamptons is over. Nobody is going to buy if they think the prices are coming down. It doesn’t matter how big ones’ wall street bonus is. These folks pride themselves in being smart and the days of paying stupid prices are over. The Hamptons crowd will sit in all day traffic and drink Evian because they know the groundwater is deleterious. But they won’t overpay. Look for a very large drop in price and a very long recovery period.
I was in Southampton over the weekend. There have been some decent cuts in asking prices among motivated sellers, but it seems like a lot of sellers are fishing.
I saw one place in a good location (in the village) which had a $3.3mm price tag. The agent told me that the owners bought it in 05 for for 1.3mm, tore down the old place and rebuilt what was a pretty nice home with a pool,etc. Let’s say all-in construction was $1mm, do these people think that they can reasonably expect a $1mm profit for their endeavor?
There is still a lot of denial out there…
This is similar to what has already been said about remodelers trying to get back the $$$ they put in…but on a much grander scale…and it’s ALL stupid.
BayQT~
“But incentives can be easier for builders to swallow. ‘The fact that they’re giving back $10,000, $20,000 or $30,000 in extras somehow seems a little more psychologically palatable than taking down the $500,000 sign and putting up a $470,000 sign,’ said Michael Schonberger, an adjunct professor of real estate financing at Rutgers University.”
At least it avoids the need to fraudulently overstate the appraisal by $30,000.
It will all depend on if the incentives added value to the property or not and made it a $500k property instead of a 470K property .
And who could give a rat’s azz if it’s easier to swallow for the builder? It still screws the buyer since they wind up with the tax bill. Talk about every man out for himself. Sheesh!
BayQT~
Does a new car in the driveway count as a property improvement nowadays?
“All That Bubble Talk Isn’t Coming From Nowhere”
First it came from visionaries like Shiller, Leamer, Ken Rosen, and the writers at The Economist magazine. Next it came from the blogosphere. Finally it comes from MSM reports and even REIC cheerleaders who have to address a preponderance of emerging evidence or lose all credibility.
“Offering the car is better than simply cutting the house price by $125,000, said spokeswoman Karen Kessler, because ‘our buyers are not looking for a bargain; they’re looking for some pizazz and some excitement.’”
No, you disruptable skank, you’re desperately hoping that flashing a bright shiny object in front of some FB lemming with more money than brains will help shore up your undeserved commission. I hope the Repo man is kind enough to make a quicky service stop on the street corner you’ll soon be working as he’s hauling your “pizazz and excitement” back to the dealer.
I would guess that cars are never really given away. Instead, what happens is price is negotiated down. The whole car give away b.s. and is just there to get the agent and the listing into the local paper. All over the country, reporters are writing stories about the bust and realtors realize this so they have a seller show up in the article by offer something stupid like a sports car. It is a teazer to attract the media which hopefully will convert to more buyers looking at the property.