Realtor offers free car with home purchase

CountryWide Homes sales assistant Pavlena Allerston attaches red bow to a Kia sedan at the Woodland Hills sales centre in Newmarket, Nov. 4, 2008. In a prominent example of the giveaway climate taking hold in new home market, if you buy one of the company's $369,990 houses, the car is yours.

A free plasma TV. A trip to Paris. A break on land taxes. A new car.

With housing sales down dramatically in the Greater Toronto Area this year, developers and real estate agents are playing Let's Make A Deal, and buyers stand to benefit.

"Everyone is doing what they can to attract buyers; there is so much doom and gloom," says Kelly Collins, chief operating officer for CountryWide Homes. "Anything you can do to differentiate yourself from the competition helps."

To that end, her company "for a limited time" is tacking on the option of a free car - a 2010 Kia Rio EX sedan that she says is valued at $15,000 on the road - when someone purchases a home at Woodland Hills in Newmarket.

In addition, the buyer gets $7,500 in upgrades on homes that go from $369,990 for 1,743 square feet to $425,990 for 2,491 square feet.

"We knew the economy was changing ... we thought having a fuel-efficient car as part of the package with an energy-efficient new home would work," Collins says.

Kia Motors was approached to talk numbers, and the car maker, imagining an entire community of Kia owners, was delighted by the promotion, says Collins.

There's a reason why vendors are adding generous incentives.

New home sales were down by more than 30 per cent from 2007 entering October and a slowing economy has consumers wary that prices may fall further. In the resale market, GTA home prices fell by 11 per cent in mid-October compared with the year before.

Developers like giveaways because they don't have to slash prices, insiders say. That doesn't mean the add-ons are free: their cost is built into the final price and are often a prelude to price reductions.

"The only giveaway they were doing last year was sticking you in a mile-long lineup and maybe giving you a glass of water so you didn't pass out," realtor Mike Donia says. "You were lucky to get a toaster. Now you're getting a trip to Paris."

Some developers are taking a page out of the cruise industry's book and extending price protection to buyers. If the price they commit to goes lower, the company refunds the difference.

Quick-hit special offers are arriving in agents' inboxes.

Tonight, for example, Fly Condos on Front St. is including a parking spot they value at $35,000 with certain unit purchases.

Next weekend, in another one-day event, downtown Victoria Lofts is throwing in $5,000 in upgrades for buyers.

Developers are willing to deal because they're worried about getting stuck with unsold inventory in a slowing market.

The same goes in the resale market, where both vendors and buyers are catching breaks.

ReMax realtor David Batori plans to offer clients a refund equivalent to 50 per cent of the city's unpopular land-transfer tax, starting at the end of November when the festive season and cold weather starts to cut into business.

"The buyers are out there, but they're sitting on the fence. This is one way to get them off," Batori says. "In this market, you have to be creative."

For someone buying a $350,000 home, Batori says his deal will result in a $3,000-plus rebate. In the North Toronto neighbourhood where he works, a not atypical $800,000 home buyer would save almost $12,000, he says.

"It won't change your life, but having a few thousand dollars more in your pocket can't hurt," Batori says. He is so convinced of the promotion that he is offering it not just to listing clients, but to customers who view and buy the homes.

"If it means people will come to see my house instead of the house next door because of that, then it's worth it," he says.

"In a tough market you have to stand out."

At CountryWide, buyers haven't been shy to ask about the Kia car deal at other sites, says Collins.

"Buyers shop around, and good for them," she says. "I wouldn't be surprised if they took our ad to another developer and asked for a discount."

Meanwhile, Collins says the promotion is drawing more traffic to the Newmarket site, though no buyer so far has opted for the free car, choosing instead the option of a $15,000 upgrades package. No matter, says Collins; the promotion "got the buyers in the door."

And buyers aren't the only ones cashing in on promotions.

Some realtors are also seeing bigger rewards to move product, such as larger commissions in the new condo market. A typical 2 or 3 per cent commission might now be as high as 5 per cent, Donia says.

On a $300,000 condo, that means the agent could pocket $15,000 "just for showing the client where the door to the sales centre is," says Donia. "But first you have to find the client."