Call it the do-it-yourself stimulus.
With tonight's expiration of the government's homebuyer tax credit, real estate firms, developers and home owners are already taking matters into their own hands—offering incentives or refunds to buyers after the credit expires.
The expiring credit—which gives first-time homebuyers and some current homeowners a tax credit of up to $8,000 if they sign a contract by midnight tonight and close the sale by June 30—has been widely viewed as helping boost home sales in recent months.
For that reason, some real estate firms are pushing home sellers to offer incentives of their own, usually by agreeing to refund some of the purchase price to the buyer. Some developers are offering similar refunds to buyers of new homes or condos.
“In a way, it’s marketing the property,” says Gloria Marina, an agent at Florida-based real estate firm Esslinger Wooten Maxwell, who recently convinced a seller to offer an $8,000 refund on a $269,000 home in the Miami area. “The usual way you motivate people to buy is to drop prices, but this house is already well priced.”
Though the government's tax credit has already been extended twice, no one expects that to happen again.
“It will not be extended,” says Lucien Slavant of the National Association of Realtors, adding that he doesn’t know of any current legislation to extend the tax credit.
One of the larger companies pushing the new incentives is Coldwell Banker, a subsidiary of the global real estate giant Realogy. It is asking sellers to participate in a program that will give buyers 3 percent off the agreed-to sale price, up to a maximum of $8,000. The program will run from May 1 through July 31.
Sellers who participate receive additional marketing support, including television ads and a mention on Facebook and Twitter, says Coldwell Banker’s CEO Jim Gillespie.
Scott Lammie, who has been trying to unload his three-bedroom, Gibsonia,-Pa. home since last fall, recently signed up for the Coldwell Banker promotion. If he sells the home at its current list price of $399,800, Lammie has agreed to refund the buyer $8,000.
“It’s a way of continuing interest,” he says, “We felt it made sense to pursue it.”
Other firms are offering buyer incentives, too.
Homebuilders in Minooka, Ill. are teaming up with the village to offer a $10,000 refund to buyers who purchase a newly constructed home in the community by Dec. 31. Minooka and the homebuilders split the cost, each contributing $5,000.
“We reduced our prices as much as we can,” says John Wozniak, co-owner and vice president of J. Lawrence Homes, which is participating in the program. “I think it’s important to hold price values,” he said. The new homes are in the $199,000 to $249,000 range.
In the New York Tri-State area, developer Sterling Properties is offering a $9,000 refund off the purchase price of apartments in The Avenue at South Orange, a new development in New Jersey. The company plans to expand the deal to all its communities in May, as long as the sale closes by June 30, says Rosanne Brooks, Sterling's director of sales and marketing
“We see it as a great tool," says Brooks.