How about a college education with your new condo?

A slow market has developers offering everything from shopping sprees to new cars to vacations.
BY RICHARD WESTLUND

''I had been looking for about six months, and didn't have an immediate need to buy,'' said Nisius, an agricultural exports manager for Cargill who was seeking a shorter commute to her Coral Gables office. ``The developer offered to waive his fees and pay my closing costs.''

Before Nisius moves into her $400,000 condominium this month, she will take advantage of a $4,000 credit from Rooms to Go, whose Dadeland showroom is on the ground floor of Toscano, and another $1,000 credit from Best Buy. ''I'm moving from a three-bedroom house further south and downsizing, so some of my current furniture won't work at my new condo,'' she said. ``Getting all new furniture for free was a real incentive for me.''

Faced with a sharp drop-off in demand at a time when thousands of new units are coming on the market, South Florida developers are offering a host of financial incentives to attract buyers like Nisius. To take just one example, Abel Homes was recently offering zero down payments, no closing costs and no association fees for a year on the remaining townhomes at its Naranja Villas development in Southwest Miami-Dade.

''I think it's essential for builders to offer incentives,'' said Al Piazza, CEO of Coscan Homes in Fort Lauderdale. ``Customers today are expecting them, and with the market still so slow, I think you'll see even more out there.''

To promote its new family-oriented Orchid Grove townhouse community in Pompano Beach, Coscan is offering buyers a free four-year college education for one child or grandchild. Under the incentive program, which is scheduled to run until May 1, Coscan will cover the child's cost to enroll in the Florida Pre-Paid College Plan, about $10,000.

LOT OF INTEREST

Piazza said he got the idea from developer friends in New York who offered a similar incentive in the 1980s. ''We've had a lot of interest from both buyers and brokers,'' he said. ``It's generated a lot of talk and I'm sure it will be an important consideration for many buyers as we begin closing these sales.''

In the past year, some individual sellers have offered new cars, airline tickets or exotic vacations to market their homes. But buyers usually prefer a cash incentive, such as a discount in the sales price or the payment of closing costs. In a recent national survey by online real estate company HouseHunt, 77 percent of responding buyers said payment of closing costs was their top incentive choice.

''Not surprising, this would represent a bottom-line savings of several thousand dollars in normal closing cost fees and services,'' said Michael Bearden, president and CEO, in announcing the results.

Many developers in South Florida today are typically offering a package of incentives, according to Ron Shuffield, president, Esslinger-Wooten-Maxwell in Coral Gables.

''We've worked with developers who gave away car leases to buyers,'' Shuffield said. ``We're not doing that anymore. Most people prefer incentives like having their homeowner fees paid for a year or two, or other costs associated with the transaction.''

One common incentive today in the new home market is waiving a provision in the sales contract that requires the buyer to pay a 1.5 to 1.75 percent fee to the developer. Those fees, which covered some of the developer's closing costs and enhanced a project's profitability, were widely imposed several years ago at the height of the recent boom market. ''Many developers are now paying closing costs for the buyers, which are usually 2 to 3 percent of the sale price,'' said Shuffield. ``If you include the waiving of the developer's fees and other incentives, a buyer's savings today can be 5 to 6 percent altogether.''

Some real estate brokerages and developers offer discounts to buyers who use their affiliated mortgage and title services. However, buyers should also compare fees with independent companies to be sure they are getting the best deal.

SELLERS IN ACT

Individual sellers are also offering incentives, such as paying a buyer's closing costs or homeowner association fees. Again, it's important for buyers to be sure the seller has not inflated the sales price in order to offer these ``discounts.''

Regardless of incentives, the best way for a seller to market a home is to price it correctly, said Mike Pappas, president of The Keyes Co. in Miami. ''Sellers don't have to resort to gimmicks and making sacrifices,'' he said. ``In reality, if a seller works with an agent at pricing his or her property correctly, and that property receives proper attention and exposure, this is the magic formula for a successful sale.''

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richard.westlund@earthlink.net
Posted on Sun, Jan. 14, 2007
Source: MiamiHerald.com