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The Mother Of All Incentives !

September 25, 2006

Last week, it was Corey Barton Homes new “Live Free” program, offering to pay the first six months of mortgage payments to draw buyers to their subdivisions.

This week, it’s Hubble Homes offering buyer agents a $10,000 bonus commission, in addition to a 3% selling commission, to entice them to bring their buyers to Hubble’s Charter Pointe subdivision.

According to Intermountain MLS data, there are 67 homes for sale in Charter Pointe, of which 55 are new/never occupied homes and 12 are resale listings.

The average asking price for the 55 new homes in MLS is $228,071.

Despite Hubble Homes’ practices of not selling to flippers/speculators, I wouldn’t be surprised if some of the 12 resale listings are investor-owned; thereby creating additional competition for the builder.

A buyer’s agent who sells that average home will be paid a 3% selling commission of $6,842, plus the $10,000 bonus commission, totaling $16,842 in commission for bringing in the buyer.

That works out to a 7.38% commission to the selling agent; not including any commission paid to the listing agent.

Obviously, Hubble Homes is motivated to clear out some standing inventory.

I can only imagine how exciting life becomes for a builder with $12.5 MILLION of unsold inventory in just one of their many subdivisions.

Sure hope those buyer agents realize the need to disclose their compensation to their buyers up front.

I sure wouldn’t want to face a buyer who learned, after the fact, that I was being paid $16,000+ dollars for steering them toward buying a $228k home.

Wouldn’t it be simpler to offer that extra $10,000 directly to the buyer in the form of a lower price, seller-paid closing costs, or upgrades?

(see my 9/21/06 posting “Builders Offering Inventive Incentives” for more info on this topic).

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Phil Hoover
Real Estate Broker
Phil Hoover, Inc

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