Housing Market Meltdown Making Sellers Extremely Creative

It’s not new news that the housing market is in the dumper. That’s generally good news for buyers, but shall we say less than optimal if you’re looking to sell your home any time soon. So what’s a seller to do? Looks like creativity is the name of the game. Sellers are dipping into their handbag of tricks to try and unload properties worth more yesterday than they are today (and worth even less tomorrow) Here’s a sampling of what sellers are doing:

  • A Pittsburgh couple will fully refund the home’s selling price when they pass away.
  • Owners in Florida are holding a raffle in hopes of getting close to their selling price.
  • Others are giving away free cars and using their kids as advertising.
  • One owner is even considering giving away his house and taking the tax write-off.
  • We’re betting that we’ll eventually see a person willing to pay someone to take their house!

    FREE MONEY FINANCE
    (Photo: Getty)

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    1. savvy999 says:

      In my neighborhood, one house had a standing offer of 2 free airline tickets anywhere in the CONUS, another one had an older Jaguar in the garage, free to the new owner. (btw– luxury car, not wild feline).

      Both sold. YMMV.

    2. Gesualdo says:

      For most people to sell, they’ll end up needing to be more realistic than creative. Expectations of sales prices and profit margins need to adjust to match the markets. As syndicated newspaper columnist Edith Lank often tells people on her website, AskEdith.com, if you listed your house for $1, it would sell immediately. The challenge is to find the balance between what you’re willing to sell for and what the buyer is willing to pay.

      I also hope that the recent sub-prime meltdown will help people realize that some of these home-selling gimmicks aren’t necessarily any more sound than the
      interest-only ARMs and 4x income mortgage payments which people got a few years ago. Of course, if the average American consumer were smart enough to figure out that gimmicks are just that, gimmicks, the American economy would probably crumble.

    3. MercuryPDX says:

      A house in my neighborhood dumped their realtor, made a huge show about it (Banners, signs in the neighborhood, balloons!), and held an auction. Two weeks later, signs for “HelpUSell” went up. I guess the bidding wasn’t as high as they had hoped?

    4. Sudonum says:

      Luckily we’re building and selling houses in am area of the country where the real estate market is still stable. But even so, we’ve had to offer incentives such as money toward closing and/or a bonus to the selling agent.

    5. Buran says:

      @MercuryPDX: Or maybe they had unrealistic expectations, like the asking price for this ugly slab in my area:

      Kingbridge Homes, LLC – 2409 High School Avenue

      The address on the page and the address in the title bar are confused because it’s on the corner, but the address listed on the page itself is the correct one.

    6. ARP says:

      GESUALDO- I agree with you, but part of the problem is that some people may end up selling their house for less than they bought it. Or, if you’re like me, I’ve owned my house (condo) for 3 years and its gone up an estimated $5-10K. With realtor’s fees, I’m selling at at loss. I also agree with other posters that Americans are suckers, quite frankly. We’ll pay attention to anything shiny. So, offer a crappy $5K car or $5k in upgrades or [insert $5k gimmick here] but keep your net selling price $10k higher? Sold!

    7. Majisto says:

      Note to sellers: Lowering your price may also sell your house fast!

    8. Gesualdo says:

      @MercuryPDX: Same thing happened in my neighborhood, Mercury. The literature for their auction sounded pretty ridiculous though; whomever “won” the action (which already had a reserve price about 15% higher than comparable in the neighborhood) had to pay a “buyer’s premium” of additional 10% on top of their winning bid. No big surprise to me that nobody bought the place.

      After HelpUSell went up, they tried a rent-to-own plan, which didn’t move. A few months later, the Realtor changed, then again a few months after that. I guess changing Realtors and relisting let them reset the Days on Market counter.

      I almost felt sorry for the guy who’s trying to sell, but then I remember that he bought it with the intent to flip and it doesn’t bother me as much.

    9. mizj says:

      @Buran: $522K? Are they NUTS?

    10. nutrigm says:

      @BURAN: That isn’t such a bad deal actually!

    11. cashmerewhore says:

      My seller paid my downpayment and closing costs, and this was almost three years ago. Then we ended up getting $900 back at closing too (also not our money).

    12. ltlbbynthn says:

      I just saw a $5000 “bonus” if the home sold at the asking price. What does that even mean?

    13. Laffy Daffy says:

      House on my block has been on the market for almost two years … they had two contingencies that fell through and a renter for about nine months. Been through 3-5 real estate agents. Owners (both lawyers) moved to a new house with indoor pool/tennis court and a separate living quarters for 2 maids so they aren’t hurting.

    14. bentcorner says:

      A year ago we tried to put in an offer for a three bedroom townhouse. The seller informed our agent that he had just gotten an offer at the full asking price so if we wanted to also put in an offer, it would have to have “hair” on it.

      My wife and I had no idea what that even meant. We took that as a sign that we should wait. Am I glad we did. Townhouses in that same neighborhood have dropped substantially. We are going to wait at least one more year before we even think about buying.

    15. forever_knight says:

      @cashmerewhore: so that means the house was overpriced to begin with? :D

    16. Buran says:

      @mizj: Apparently! For that kind of money I want something MUCH nicer. Feel free to look up the neighborhood home values on zillow.com to see how outrageous that is.

    17. jscott73 says:

      I would bet anything that is the realtors and their national association that is pushing for sellers to be “creative” instead of just lowering their prices. This artificially inflates their commission at a true loss to the sellers/buyers. Haven’t we learned enough about creative approaches to home ownership to simply insist on fair prices, not one gimmick after another.

    18. satoru says:

      @ltlbbynthn: A bonus on the home generally means they will give you that money in cash at the end of the transaction. Because realtors work on commission, it is beneficial to them to have the sellers give $5000 to the buyer rather than dropping the price $5000.

    19. CumaeanSibyl says:

      Seriously, just lower the price. There’s a house in my neighborhood that’s overpriced by about $20K. Thing is, this is also a low-priced neighborhood, which means the house is overpriced by about 20-30%. I went to their open house, and only one other person had come to see it in the three hours they’d been open. Six months from now they’ll still be wondering why it hasn’t sold, but no gimmick in the world will save them.

    20. Mary says:

      Bonuses and seller subsidies make the home cost less for the buyer, but look like it cost more on the paperwork. Which is somehow good for everybody, I don’t really get the whys and hows.

      I just know that what I’m rather disgusted with at the moment is “Quick turn” real estate. It feels shady and possibly illegal…but everybody seems to think the money is in it.

    21. Buran says:

      @CumaeanSibyl: Sounds exactly like the one that got built here except they’re charging something like twice what any sane person would pay here.

    22. Sudonum says:

      @meiran:
      It keeps the comparable sales statistics for the neighborhood up. Which is good for the resale value when you or other homeowners want to (try to) sell.
      @satoru:
      @jscott73:
      We were offering a bonus of several thousand dollars to the selling agent for the last 2 houses we had built in a new sub-division. Both agents gave the money to the buyers to help with the closing costs. Also both homes were bought with traditional 20% down fixed rate loans.

      My wife is a member of the National Association of Realtors. I read the monthly magazine that she gets. The NAR isn’t “pushing” anything. All they are doing is communicating what effective sales methods have been used by other agents. As to individual agents and brokers? Well YMMV…..

    23. Sudonum says:

      @Buran:
      Don’t like it don’t buy it. As to the price, when I enter that address into Zillow, a link below the map shows a house in the same neighborhood listed at $164,407 for 882 square feet, or $186.39 per square foot. The McMansion you linked to is listed at $522,900 for 2784 SF, or $187.82 per SF. It sounds like the comparables are close, however the McMansion will take a hit if it’s the biggest house in the neighborhood. That could drop the SF price down a couple of bucks, but it also depends on the amenities, slab granite counters, plumbing fixtures, the quality of the hardwood and carpet on the floors. Ceramic tile or stone in the bath rooms and showers. It may be over built for the neighborhood, since the comparable that Zillow showed was only a 1 bedroom, 1 bath. But I also don’t trust Zillow, as numbers on houses that I know sold for more were not reflected on their web site.

    24. Womblebug says:

      @Buran: What’s up with those lines in the floor plans? Looks like the little kid from Family Circle was at the open house.

    25. Sudonum says:

      @womblebug:
      Thats the “electrical plan” that they used for the floor plan. Those squiggly lines show the circuits running from the wall switches to the ceiling lights/fans.

    26. cashmerewhore says:

      @forever_knight:

      We paid nothing, plus got two months of house payments outta the deal. It wasn’t as inflated as most properties in the area, so we still have a decent amount of equity in it now two years later. Nothing I’d rush off and sell over, but it’s better than nothing. And with a 30 year fixed, our payments only change when property taxes go up.

    27. etinterrapax says:

      Around here, people–and developers–still think they can get the equity they had four years ago. So we’ll be keeping our little starter castle for quite a few years longer than we’d originally planned, barring changes in our situation or the market (though the market would have to change pretty drastically to make a bigger house affordable to us). I don’t feel sorry for them if they really do have to be somewhere else. We don’t.

    28. Buran says:

      @Sudonum: I should point out however how UGLY this house is. Yes, it’s larger. But it looks disgusting. And it’s not that much larger than the houses around it. All of us who live here think that thing is only work 300k at the most, and it’s been for sale for something like a year, seems like, and just keeps sitting there and sitting there and sitting there. No one is going to buy that ugly thing for that kind of money.

    29. Sudonum says:

      @Buran:
      Yeah, the house is pretty fugly. No curb appeal whatsoever. The builder should have used something besides siding, maybe some brick in front, or half brick, half siding. I also found it odd that there were no interior pictures.

    30. vacuumrt says:

      @Buran:

      That house would be listed for about $799K in my area (north Jersey, NYC suburb).

    31. SexCpotatoes says:

      I think we’re about to see a lot more “unsolved” cases of arson in the news.