Escondido Real Estate

Are Builder Incentives Really A Good Deal?

Owners of Escondido Real Estate who are eager to sell in a buyer's market have found a new angle, offering sellers incentives such as cash to help defray the cost of the closing or even to pay for some remodeling to the Escondido Real Estate that has been on the market for a while.  Sometimes this is referred to as seller concessions in real estate. If you are in the market for Escondido Real Estate with give backs, incentives, or concessions you may want to read these investors tips.

 

The givebacks, which are legal if disclosed to lenders, have become so common that the multiple listing service where real estate agents list and track home sales data now includes an entry line for seller concessions. In the last four months of 2007, for example, 35 of 191 homes that sold in West Hartford had seller concessions.

• Get all offers and incentives in writing

• Think about offers overnight or for a few days

• Do the math

• Decide if your really getting a good deal

It's very common, especially among first-time home buyers and any buyer who doesn't have a lot of cash in hand, buyers like to walk away from a closing and still have cash in their pocket."

For example, it is estimated that half of all home sales have some sort of seller incentive that does not show up in the final sales price.

The benefits are obvious for buyers who are struggling to come up with enough money for a down payment, closing costs and home renovations. Buyers can take out a slightly larger mortgage, based on the recorded sale price, and move into their new house with more money.

However, the inducements make it harder to calculate the real selling price of homes and determine if prices are declining in a soft market, and by how much.

For example, a three-bedroom ranch-style house sold for 193,000 and the sellers gave the buyer $5,000 at closing. The purchase price was recorded as $193,000, but the true sales price after the cash transaction was $188,000.

The result is that home sale prices are propped up artificially, running counter to what typically happens in a housing slowdown.

It's a big deal because prices are, in fact, falling. We know they are falling, but that is not reflected in the numbers we see.

Even modest cashback transactions of between $2,000 and $5,000 could skew the overall sales price data by 1 percent to 3 percent.

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