It's on the house
Builders are having more trouble selling homes, so they're starting to put together package deals. You want a plasma TV with that?
By JAMES THORNER
Published April 16, 2006
During last year's hot housing market, you haggled with home builders at the risk of ridicule.
But softening home sales this year have turned cold brush-offs into warm embraces:
May I offer you a free plasma television, a $999 gas card or $6,000 off your closing costs?
Credit the emerging buyers' market, which is dramatically affecting how new homes are marketed in the Tampa Bay area.
With sales in a slide and inventories on the rise, builders are pulling out the promotional stops. Large price cuts are scarce, but builders are piling on the incentives: free granite counters, stainless steel stoves, prepaid homeowners association fees, even complimentary maid service.
- Jade at Tampa Palms, a condominium complex in New Tampa, has yanked a page from the first-day-of-Christmas-shopping-season playbook: If you're among the first 25 buyers, you get a free garage.
- Beach Way Condominiums in Seminole is dealing, if not wheeling. "We'll Pay Your Mortgage for a Full Year!" its ad screams across several newspaper columns.
- Heard of blue-light specials? David Weekley Homes, selling houses "from the 380s" in Pasco County's Wilderness Lake Preserve, is holding a "Red Tag Event" with "once-in-a-blue-moon" prices.
- Housing giant Lennar has been slinging flat-screen TVs and $5,000 gift certificates from Rooms to Go. Buy a house, get the goodies. This month it's hawking house discounts, up to $62,000 in subdivisions such as Concord Station on State Road 54.
"They need to reach buyers. They've got too much product," said Jim Knetsch, owner of RE/MAX Realty Associates Inc. in Carrollwood, bombarded daily with 10 to 15 e-mailed promotions from builders. "Since Feb. 1, there have been significantly more special offers."
Cash payouts to real estate agents account for a big chunk of recent promotions, but the average homebuyer is kept in the dark, unaware that agents can earn big money by steering them to one home builder instead of another.
Builders typically pay agents a 3 percent commission for bringing them customers. Some have upped the ante, hiking agents' commissions or dishing out bonuses.
A recent example is U.S. Home offering real estate agents a $9,000 upfront bonus for each customer delivered to Lake Brandon Townhomes off Interstate 75. Home prices range from about $250,000 to $300,000.
"They're just trying to get a buzz going," said Cory Adler with Keller Williams Gulf Coast Realty in Pinellas County. "If someone says, "We'll give you a bonus,' Realtors are more inclined to add those homes to their sales inventory."
Slowing sales and growing inventory - a trend noted in the fall - are driving builder promotions across Pinellas, Hillsborough and Pasco counties.
Locally, new home permits in the first two months of this year were off 10 percent from the same period last year, according to MetroStudy, a firm that tracks the housing industry. For multifamily housing, including townhomes and condominiums, the drop was 20 percent.
A drive through Connerton New Town Development in Pasco, destined to be among the biggest communities in Florida, reveals "For Sale" and "Available" signs spiking many lawns, a clue you've stumbled on unsold investor and inventory homes.
Some builders are dolling themselves up to win back fickle investors, a mainstay of last year's frenzied building environment.
One deal broadcast among Tampa Bay area agents: Builders will pay investors' mortgage interest, real estate taxes and association fees for a full year.
"You Collect the Rent. We Pay the "Carry' for the 1st Year," an advertisement reads.
Joe Narkiewicz, executive vice president of the Tampa Bay Builders Association, views the promotions more as sign of competitiveness than of concern.
Home sales are normalizing after the unprecedented hustle and bustle of 2005, and builders have to strive for the attention of customers, he said.
"I think incentives are perhaps to move inventory and prepare for the next model wave they perhaps plan to offer," Narkiewicz said.
Real estate agents caution that some home price cuts and giveaways aren't what they seem.
Builders are known to slash standard home upgrades to cover their lower-priced listings. Corian plastic counter tops might substitute for granite, builders grade carpet for plush pile.
As one model home sales representative said: "If you get a "free' plasma TV, do you think you're not paying for it in the home price?"
Few builders want to admit they overpriced homes during last year's boom, agents and sales center staffers said. Incentives are a way to stimulate business without depressing the bottom line.
"You'd rather offer incentives and hold the price the same," Knetsch said, "because when the market turns around, you can pull the incentives more quickly than you can raise the price."
James Thorner can be reached at thorner@sptimes.com or 813 226-3313.