Stop with the gimmicks and cut the price

From the NY Times:

Going Beyond Price Cuts

A PERSISTENT recession in house sales has led to a surge in “concessions” for buyers. In listings and brochures, and most recently through a program started up on, real estate agents are trumpeting the news: even sellers who have reduced asking prices by a lot are often willing to do more.

That means contract concessions, in which sellers may agree to cover a buyer’s closing costs, provide a gift card for a certain amount, pay in advance for renovations, or even subsidize taxes by allocating funds from their proceeds at closing.

As long as concessions are written into a contract, and are also explicit in the Housing and Urban Development settlement document (a form used in closings), many banks in New Jersey are approving mortgage loans with up to 3 percent of purchase price in seller concessions, according to sales professionals. And when it comes to loans issued with the backing of the Federal Housing Administration or Veterans Affairs, up to 6 percent of sales price is allowable, and is becoming a popular option, agents and brokers said.

Right now, for example, a $5,000 credit toward closing costs — or a gift card for that amount — is being offered by the seller of a four-bedroom colonial in Wall Township that has been for sale for 16 months. The offer is being advertised as part of the independent broker Robert Bruno’s listing on Zillow.

Built five years ago, the house then cost $565,000, according to public records. It was offered for resale at $499,000; the price was reduced several times, and is now $459,900.

Four months ago, when Zillow began offering, for a fee, to highlight seller concessions on listings, Mr. Bruno opted in. The $5,000 concession offer appears in yellow highlighting under the price on the listing.

“Is it more attractive to save money over the life of the mortgage, or to bring less money to closing and have some cash available at the time of move-in?” Ms. Baldwin asked. “Generally, I would say nothing beats a price cut to make a sale. On the other hand, some people have to scrape just to come up with the higher down payments required now, and need some cash.”

In southern New Jersey, Christopher McKenty, a broker at Re/Max Connection, has a West Collingswood house listed on Zillow with a $2,500 “special offer.” But he says price cuts are “the name of the game.”

A price reduction still gets more attention, he said, adding that he probably won’t use the concession gambit in the future.

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52 Responses to Stop with the gimmicks and cut the price

  1. grim says:

    From the Record:

    Area home prices drop 8 percent in fourth quarter, Realtors say

    Home prices in the New York metropolitan area, including North Jersey, dropped 8 percent to a median $414,500 in the fourth quarter of 2011, the National Association of Realtors said Thursday.

    Nationally, the price of an existing single-family home dropped 4.2 percent from the fourth quarter of 2010 to the fourth quarter of 2011, to a median $163,500.

    “Pricing is not what it used to be; there’s a new normal,” said Eileen Meehan, a Re/Max agent in Saddle River.

    As prices have dropped, affordability has reached a record high nationwide, the NAR also said Thursday. Its affordability index reached 184 in 2011, meaning that the median-income household has 184 percent of the income needed to buy a median-priced existing single family home.

    But this region remains unaffordable to many households. According to the NAR, the median-income household in the New York metropolitan area, including North Jersey, has only about two-thirds of the income needed to buy a median-priced home.

    Home prices have slid more than 20 percent in the region and more than 30 percent nationwide since the peak of the housing bubble in 2006. Many homeowners who got mortgages in a period of easy credit defaulted on their loans after losing their jobs during the 2007-09 recession. Since then, the large number of distressed properties on the market has tended to pull down prices.

  2. grim says:

    From the APP:

    NJ home prices fall, but number of sales on the rise

    The median price of a single-family house in counties around New Jersey plummeted in the fourth quarter, according to the National Association of Realtors, but behind the numbers are signs of recovery.

    A decline in the median price for a home comes as more home buyers snap up houses that are priced less than $400,000, said Jeffrey Otteau, president of Otteau Valuation Group, a real estate appraisal and consulting firm in East Brunswick.

    “There is a momentum building in the housing market. It is entirely occurring in the lower price ranges,” Otteau said. “All housing recoveries begin in that entry-level price range. In order for a recovery to be sustainable, it must occur on the bottom rung of the price ladder.”

    Economist Joel L. Naroff, president of Naroff Economic Advisors in Holland, Pa., said median price figures can be misleading.
    “They are heavily impacted by the distressed homes, the foreclosures, the homes being bought by investors,” Naroff said. “That doesn’t say the market is good, it just says that you can’t take the price as being truly reflective of what is going on throughout the market.”

    Otteau, whose firm gathers its own data, said lower median prices are a result of the sale of more lower-priced homes and fewer of those in the higher price range.

    For instance, the sale of houses priced at under $400,000 in New Jersey rose 9.4 percent from August through December while the number of homes sold in the range of $1 million to $2.5 million fell 16.7 percent.
    That, along with the sale of foreclosures and short sales, in which a house is sold for less than what is owed on the mortgage, worked to push the median price down, Otteau said.
    The decline in prices has made homes more affordable. A family with a median income now has 118 percent of the income necessary to be able to buy a median-priced home, Otteau said.

  3. grim says:

    Not sure how I missed this one two days ago..

    From Bloomberg:

    NJ Has Backlog of Up to 100K Foreclosures

    New Jersey must work through a backlog of 50,000 to 100,000 unprocessed foreclosures because of delays caused by an investigation into how lenders handled the filings, said Richard Constable, acting commissioner of the state Community Affairs Department.

    Foreclosures slowed to about 10,000 last year from 50,000 in 2010 and 150,000 two years ago after claims of “robo- signing” — unverified documents sped through the system — spurred an investigation by state attorneys general at the end of 2010, Constable said today at a meeting of mayors in the Statehouse in Trenton.

    As many as 100,000 properties will soon come to market in New Jersey as banks resume processing foreclosure sales, Constable said. The state will work with towns to make sure that the foreclosures don’t blight neighborhoods, he said.

  4. Mike says:

    Good Morning New Jersey

  5. Mike says:

    Check out the woman who played in Van Halen’s Hot For Teacher Video. She is 60 years old now. OMG

  6. SX says:

    5. Boyhood phantasy — still have her “edition” from the old days. It’s a little dogeared.

  7. gary says:

    “Pricing is not what it used to be; there’s a new normal,” said Eileen Meehan, a Re/Max agent in Saddle River.

    Tick… tick… tick… tick…

  8. grim says:

    5 – Shook her ass on the hood of Whitesnake’s car?

  9. SX says:

    Bad time to sell. Great time to buy. Better time to sit tight. Re-Fi. And chill.

  10. SX says:

    8. No, that was Tawny Kitaen.

  11. Brian says:

    Rip off the bandaid and clear the market already! Restart the foreclosure signing robots. Enough of this chinese water torture warning of shadow inventory!

    NJ Has Backlog of Up to 100K Foreclosures

  12. 3b says:

    Prices keep falling, they will reach their natural bootom, people will be out buying again, economy rebounds. It really is that simple.

  13. Comrade Nom Deplume says:

    [5] mike

    Vegetarian and a teetotaler. Damn. That explains why I look like such a lump and she is smoking hot at over a decade older.

  14. Comrade Nom Deplume says:

    Quarterly expatriate numbers out, and the last quarter was not a record setter as I had expected. Only approx. 363 expatriates.

    As I always point out, not a huge number but one has to remember two things: First, not all renunciants get reported on this list, and second, this is a list of “wealthy” renunciants, meaning that their departure represents a much larger revenue loss than if you or I left.

    Finally, to put the last couple of years in perspective, here’s a chart:

    And a fact hinted at, but not seen, in the chart: Now that the Obama Diaspora has reached its second consecutive record-setting year, more wealthy americans left the US under Obama than under the combined terms of Bill Clinton, who started the list, and George Bush. To restate, more rich folks voted with their feet in 3 years of Obamunism than under the prior 16 years of Clinton-Clinton-Bush-Bush.

    Un-PC observation: I had predicted that you would see a good deal of expatriation to Canada, Israel, Ireland, and Asia. I’m not good at emtymology, and I can’t screen for “canadian” sounding names, but a decent percentage of these names sound jewish, irish, and asian to me. Hmmmm.

    Final though: You don’t see Larry Ellison or Warren Buffett on this list, and you likely never will. These aren’t 0.1% billionaires who leave. These are the second, third, and fourth tiers of wealthy, the tiers just above what shore likes to call the “kulaks” or what I call “HENRYs”. But as small as their number is, they represent an outsized contribution to the public fisc. And when they leave, they either take their capital with them or it stays and gets taxed at preferential “treaty” rates. Right now, it’s a couple of mosquito bites, but if this bleeding continues, well, to paraphrase gary: drip . . . drip . . . drip. . .

  15. Mike says:

    3B 12 Baldy Ben Doesn’t get it though

  16. Mike says:

    Nom 13 I’m sure she has some plastic and pancake mix on her face to cover things up (still hot though)

  17. 3b says:

    #15 Mike: Too much time scratching his beard!!! He cannot focus!!

  18. No one will be spared. No one.

  19. Whoops. Look like the fraudclosure settlement isn’t quite final yet.

    “It is only appropriate, and so ironic, that a politically motivated settlement whose purpose is to squash any claims of pervasive defective document fraud (and contract law but just ask GM bondholders about that – it’s hardly news) is itself found to be… defective. American Banker reports that the reason why the terms of the so-called historic (just ask the Teleprompter in Chief) foreclosure settlement deal are not public yet, is “because a fully authorized, legally binding deal has not been inked yet.” Wait, so America’s cohort of AGs just all, pardon the pun, robosigned a piece of paper that does not exist? What next: there is a different Linda Green signature on every page of this yet to be produced document making a complete mockery of the rule of law?

    Oh and anyone who had doubts that the settlement, which incidentally is paid for by you, dear taxpayers, in the form of bank bailout cash, of which the banks still owe over $10 billion in some capacity, was merely a political ploy to get taxpayers to fund Obama’s reelection campaign by subsidizing squatters with $2,000 per vote in the presidential race come November, using banks as intermediaries to make the administration seem oh so powerful and daring to take on the banks, who in fact are the only ones benefiting from this farce, by holding a gun to the head of the hold out AGs forcing them to sign a piece of paper that does not even exist, this should put all those doubts to rest.”

  20. Anon E. Moose says:

    Nom [13];

    But you had fun along the way, didn’t you?

    >Das Leben sollte nicht eine Reise zum Grab mit der Absicht einer sicheren Ankunft in einem schoenen und gut gewarteten Koerper sein, sondern sollte man seitwaerts einrutschen, komplett aufgebraucht, kaputt und laut schreiend: “Wau, was fuer eine Fahrt !”< Translate

  21. Comrade Nom Deplume says:


    We’re getting killed by spurs. This is fcuking ugly.

  22. cobbler says:

    one segment of the market has outpaced the rest: ultraluxury, which analysts roughly define as properties costing $7 million and up. At these lofty heights, there was only the slightest of hiccups after the crash, and in the ensuing years, values have soared, with some apartments doubling in price.

    Normally, that news would mean rising prices in every other segment of the market, from the tiniest starter studios to family-size four-bedroom co-ops. But that is not happening, even with interest rates at record lows and prices considered reasonable by Manhattan standards.

    “There is a greater disconnect between the very top of the market and everything else than I have ever seen in my 25 years in the business,” said Jonathan J. Miller, the president of the appraisal firm Miller Samuel.

    Part of the reason for this, brokers and analysts say, is that the wealthiest buyers are immune to practical matters like stricter lending standards and shrunken Wall Street bonuses.

    The most expensive apartments constitute only a fraction of the market, but the impact of their rising value is greater than just the eye-popping sums they command. Along with the surge in demand for lavish prewar co-ops, the success of developments like Superior Ink in Greenwich Village, and 15 Central Park West and the Laureate on the Upper West Side, makes it all the more likely that future developers will choose luxury over affordability.

    In the 1980s, it was rental high-rises like those dotting the Upper East Side that appealed to developers. While they often offered some good-sized apartments, they were designed to accommodate as many apartments as possible. Operating under a different mindset, developers of those buildings often put fitness centers on the top floor, whereas that space now would be reserved for a penthouse getting top dollar.

    The condos that have opened in the last few years often have larger apartments and fewer units. They are aimed squarely at the rich, perhaps none more so than the new Extell development at 157th West 57th Street, called One57.

  23. One for Plume, to the tune of Daydream Believer by The Monkees:

    Cheer up, old Roy Keane
    Oh, what can it mean
    To a sad Mackems bastard
    And a shit football team…

  24. Mikeinwaiting says:

    Meat 25, thanks in my head now. Everybody sing along!

  25. chicagofinance says:

    Abe Vigoda lives….

  26. NJGator says:

    No one had Whitney in their dead pool?

  27. gary says:

    Looking through the listings in the Bergen Record this morning; prices are still making me gasp. Loads of homes listed in the 600s to 700s range. Even if you can make the monthly payment, the cost of living expenses on top of the PITI are enough to create nausea. The job market is still horrendous with no signs of stability. Sure, you can have all the food handler jobs you want but where’s the real deal? The 20 and 30 year old crowd is getting hammered with job prospects and the boomers are retiring at a clip of 17,000 per day. Who are they selling to? Someone do the math for me because I’m having trouble.

  28. grim says:

    and the boomers are retiring at a clip of 17,000 per day.

    Lots of interesting chatter about the drop in the labor force participation rate being due to exactly this. It’s an interesting thesis since if true, points to the change as being a structural/demographic one, and not necessarily all due to economic weakness and the associated difficulties with finding a job. Also, could potentially be pointing to good news for the younger and middle aged folk, who were previously denied promotions into these positions out of seniority, etc.

  29. magic seo says:

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  30. gary says:

    I’m listening to the Oblama talking heads this morning on the political talk shows and it occurred to me that they would make perfect realtors. They stick to their talking points cue card regardless of the question, can create scenarios out of thin air and can twist numbers to their benefit flawlessly.

  31. 3b says:

    #29 Remains to be seen. But you can rest assured that companies will make this work for them, not for their existing or futire employees.Companies have and will continue to have the upper hand.

  32. Juice Box says:

    BLS breaks down the labor participation rate by age group.

    It is not all boomers retiring, the young have of the lowest participation rates ever, and projections say it will drop further over the next decade.

  33. Juice Box says:

    Gary – logic and reason have no place in Politics.

  34. gator (26)-

    Bobby Brown/Whitney perfecta.

  35. chicagofinance says:

    Clot: I thought you had the Rick James/Michael Jackson/Houston Exacta?

  36. Shadow of John says:

    I wonder if Whitney Houston house was under water to.

  37. joyce says:

    Channeling gary’s rage:

    “stop with the gimmicks and cut the price”
    I couldn’t agree more… but still the property taxes are just unreal now in NJ. Very nice train town I’ve been watching. And a house that appears to be in decent shape. Asking price $400k taxes… $14,000+. The lot is 0.13 acres.

    The taxes are out of control and getting worse (not to mention the labor market uncertainty, another one of gary’s favorites). Why would anyone buy a house right now? (unless they had the intention of putting 0% down and making one payment and squatting for 3 years)

  38. Confused in NJ says:

    Greek lawmakers approve austerity bill as Athens burns
    By Harry Papachristou and Yannis Behrakis | Reuters – 21 mins ago..

    ATHENS (Reuters) – The Greek parliament approved a deeply unpopular austerity bill to secure a second EU/IMF bailout and avoid national bankruptcy, as buildings burned across central Athens and violence spread around the country.

    Cinemas, cafes, shops and banks were set ablaze in central Athens as black-masked protesters fought riot police outside parliament.

    State television reported the violence spread to the tourist islands of Corfu and Crete, the northern city of Thessaloniki and towns in central Greece. Shops were looted in the capital where police said 34 buildings were ablaze.

    Prime Minister Lucas Papademos denounced the worst breakdown of order since 2008 when violence gripped Greece for weeks after police shot a 15-year-old schoolboy.

    “Vandalism, violence and destruction have no place in a democratic country and won’t be tolerated,” he told parliament as it prepared to vote on the new 130 billion euro bailout to save Greece from a chaotic bankruptcy.

    Papademos told lawmakers shortly before they voted that they would be gravely mistaken if they rejected the package that demands deep pay, pension and job cuts, as this would threaten Greece’s place in the European mainstream.

    “It would be a huge historical injustice if the country from which European culture sprang … reached bankruptcy and was led, due to one more mistake, to national isolation and national despair,” he said.

    The chaos outside parliament showed how tough it will be to implement the measures. A Reuters photographer saw buildings in Athens engulfed in flames and huge plumes of smoke rose in the night sky.

    “We are facing destruction. Our country, our home, has become ripe for burning, the centre of Athens is in flames. We cannot allow populism to burn our country down,” conservative lawmaker Costis Hatzidakis told parliament.

    The air in Syntagma Square outside parliament was thick with tear gas as riot police fought running battles with youths who smashed marble balustrades and hurled stones and petrol bombs.

    Terrified Greeks and tourists fled the rock-strewn streets and the clouds of stinging gas, cramming into hotel lobbies for shelter as lines of riot police

  39. Bystander says:

    Mike #5,

    I had not seen that video in years. I was just 11 when it came out but I never forgot the woman in the blue bikini. She was amazing. I just googled Lillian Mueller and all I can say is wow. She was fully blonde above and below. So naturally pretty. 70s women rocked. Today’s girls are bleached, waxed, tattooed, pierced and have ugly, plastic fake uns…just not the same.

  40. Mocha says:

    Can anyone recommend a good inspector and roofer in the bergen county area?

  41. Mocha says:

    83 year old clay tiled roof. Should I be concerned?

  42. Happy Renter says:

    “As prices have dropped, affordability has reached a record high nationwide, the NAR also said Thursday. Its affordability index reached 184 in 2011, meaning that the median-income household has 184 percent of the income needed to buy a median-priced existing single family home.

    But this region remains unaffordable to many households. According to the NAR, the median-income household in the New York metropolitan area, including North Jersey, has only about two-thirds of the income needed to buy a median-priced home.”

    Please refer all questions to Gary.

  43. Burn mf’er, burn!!!!

    If the Greek gubmint won’t default, the people will force it to. The tipping point has been reached.

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  45. Double Down says:

    Scenario: a house closes at a $400,000 sale price, not counting a $10,000 seller “credit.”

    Will public records reflect the sale as $400,000 or the correct $390,000 amount?

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