Friday, November 11, 2005

Homebuilders Sweeten Buyer Incentives(November 10, 2005) -- A growing number of builders have begun to offer incentives to attract buyers, as higher mortgage rates and home prices put a damper on sales and boost inventories of unsold homes. A poll conducted by the National Association of Home Builders in September shows the number of builders providing non-price incentives jumped to 58 percent from 51 percent over six months. Incentives now stand at about 5 percent of the sales price, according to Credit Suisse First Boston housing analyst Ivy Zelman, up from the usual 2 percent to 3 percent. These incentives include closing-cost assistance, golf-club memberships, and "employee pricing" discounts. Some builders are even offering real estate practitioners higher commissions or bonuses for bringing in buyers. The Mitchell Cos. is giving buyers of condo-hotel units in its Melia Royal Palm development in Miami Beach a 10 percent price discount and pledging to repurchase the units in 18 months for 12 percent more than what they paid. Other developers are offering free plasma televisions, upgraded cabinets, and free fireplaces, among other things. Source: Wall Street Journal (11/10/05); Dunham, Kemba J.; Simon, Ruth

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