Buyers Rejoice

In today's competitive market, home sellers and their agents are offering cash and prizes in an effort to woo potential homeowners

September 16, 2007|By Joe Burris | Joe Burris,Sun reporter

For area house hunters seeking to capitalize on today's buyers' market, Dominic Levis has a question:

Got plasma?

The four-story, 3,000-square-foot home he and a friend are selling in Butchers Hill has seven flat-screen plasma televisions already installed in several rooms, including three 15-inch television-DVD units -- two in bathrooms and one in the kitchen.

In Levis' mind, throwing these in as incentives gives his place an edge over the record number of other properties on the market these days. "After making a big purchase on a house, most people cannot go out and buy a plasma TV. This house already has them," he said.

Levis may be on to something, but so is his competition. Many sellers and agents are feeling, as they say in the real estate business, highly motivated in today's market. They're upping the ante by offering furniture, vacations, even the car in the driveway.

With home sales continuing to tumble, sellers are pulling out all the stops -- throwing in perks, trimming the purchase price by thousands of dollars, offering improvements on demand or footing some of the buyer's closing costs -- all to seal the deal. These incentives are among the reasons why shopping for a house has become a heady experience for buyers -- and a potentially more complicated and confusing one.

"What I'm seeing is that a lot of sellers' agents out there are calling buyers' agents saying, `What can my seller do to close this deal? What kind of incentives are your buyers looking for?'" said Kerri Tkach, a Realtor for the Baltimore-based RE/MAX Sails. "It's an unbelievable time to buy and negotiate."

Northern Virginia-based Realtor Brenda Gail Brown says that an agent there offered a trip to Mexico to any Realtor who could steer clients to his seller's Fairfax, Va., home. The vacation package is pending the sale of the home, she said.

William L. Yerman, president of the Greater Baltimore Board of Realtors, says that a seller in the Baltimore area offered a new car to anyone who bought his house. Another seller offered two months of mortgage payments for the buyer of his Abingdon home -- but only if the buyer agreed to pay the full asking price.

Yerman says that many of these sellers have already calculated the amount of the gifts into their sales price and cautions buyers against getting too swept up in the extras on the table. "If it's a million-dollar house," he said, "and you throw in a car, then what did you really pay for the house?"

Some sellers have agreed to make changes to their property for the sale, from painting and landscaping to replacing the roof and plumbing.

"Back in 2005, the sellers would say, `I'll do this and this, but I'm not going to do the other eight things,'" Tkach said. "Nowadays, they say, `No problem. I'll repair everything you want repaired to get to settlement.'"

Andrew Stolbach, who recently purchased a home in Federal Hill with his wife, Joyce Jones, witnessed this first-hand. The sellers covered part of the couple's closing costs to ensure that the sale would go smoothly.

"The market is so great that there isn't that pressure for buyers to do anything they're not comfortable with," Stolbach said. "We realized we had more choices than we would have had if we looked a year or two earlier."

Stuart Epstein, a residential mortgage specialist at Carrollton Bank, said that typically closing costs are about 3 percent of the sale price, but some sellers are offering as much as 6 percent.

"Buyers are using the difference toward the principal balance of the purchase price," he said. "Other buyers are paying down the interest rate to get a better loan. That's an exact opposite to 2004, when offers were coming well over the asking price."

A glut of homes on the market and a meltdown among mortgage lenders has created an environment where buyers often have the upper hand. In the Baltimore area -- long known as an inexpensive housing market -- there are far more sellers than buyers.

Metropolitan Regional Information Systems Inc., the Realtors database of property listings for Maryland, reports that last month's home sales plummeted around the region, dropping as much as 23 percent in Baltimore City and Howard County from August 2006.

Also, homes are taking longer to sell, with the average time on the market hitting 84 days, a 44 percent increase.

Michael and Patricia McKinney recently purchased a home in the Phoenix area for about 10 percent less than the asking price. The McKinneys paid $1 million -- the seller's original price was $1.1 million. And the deal was wrapped up in just two days.

"The moment we started showing interest in places, the prices started coming down," said Michael, who moved from Irvine, Calif. "The seller's agent made it clear to my buyer's agent that they were willing to negotiate."

A project manager for Baltimore-based Constellation Energy, he relocated well aware that home prices would be a draw. But what sold him on the Baltimore market was the amount of home you get for the price.

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