Coldwell Banker Extends Tax Credit

By
Real Estate Agent with McGraw Realtors

Real Estate newsletterA couple of weeks ago, my dad moved to Tulsa.  This was during the time when Active Rain was moving their data to new servers.  Because the Proxy Errors were so bad at the time, I didn't blog about his move.  I will soon. 

Yesterday, I went to check up on my dad and to see how he is doing getting moved into the new house.  On his breakfast table was the local "Woodland Glen Times."  This is the farming piece that two Coldwell Banker agents publish and distribute in the neighborhood each month.  The lead article headline is, "Buyer Bonus Program".  "Hmmm.  Interesting, I thought."  So I picked up the paper and started reading.

Here's What it Say's...

"The Coldwell Banker Buyer Bonus Event is a three month long national sales promotion that begins on May 1st and lasts through July 31st, 2010.  Sellers participating in the promotion are offering to contribute 3% of the accepted offer price up to $8000 credit at closing back to homebuyers who consummate a contract before the July 31st deadline."

It seems that Coldwell Banker has decided to extend the Homebuyer Tax Credit through their Buyer Bonus Event.  Okay, that's intriguing.  There is no doubt that the tax credit helped motivate buyers to buy houses.  But this brings up some questions for me...

1) If I'm a seller and you want me to give $8K back to a buyer at closing, where does that $8K come from?  Are you going to pay it for me as a Real Estate agent?  No?  You want me to pay it?  Then that means the price is going up $8K!

2) And if the price goes up to compensate for the $8K, we have to be concerned about the home appraising.  Appraisers are under a lot of scrutiny by the government right now from what I hear.  Appraisals are coming in tight and often low.  What happens if the appraisal comes in below the $8K raised price?  Does the $8k to the buyer go away or does the seller get stuck with the loss.  Either way, somebody ain't gonna be happy!

3) What script does one use to convince a seller to give away $8K of profit to a buyer?  Especially if the price is NOT raised?  If I'm a seller and you're trying to talk me into that, you'd have a hard time!

4) Buyer incentives are illegal in Oklahoma...at least for real estate agents.  I think CB might be on thin ice on this one since they are the ones suggesting the idea to sellers.  I don't know for sure about this since I don't have much experience with this kind of thing.  Any CB agents (or Lenn Harley LOL) are welcome to comment.

Don't get me wrong.  I think this is a novel idea.  I applaud CB for thinking out of the box.  I'm just curious to see how this might play out.  And I'd also kind of like to know if any CB agents are having any success with it!

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Bob Haywood
Bob Haywood
Owasso, Oklahoma REALTOR®

Tulsa, OK REALTOR®/ McGraw REALTORS®
Bhaywood@mcgrawrealtors.com
(918) 272-7272

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Ambassador
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Alan May
Coldwell Banker Residential - Evanston, IL
Helping you find your way home.

Bob, this is basically a seller-credit program.  Sellers are agreeing to credit up to $8,000 to their buyers (if they should receive a satisfactory offer)... they are not increasing listing prices... and CB is not participating in the rebate.

Not all CB clients have opted to participate... but those who have will be featured in special advertising, such as the ad you saw.

May 05, 2010 02:15 AM #1
Rainmaker
210,006
Marzena Melby
Coldwell Banker Burnet Realty - Richfield, MN
Realtor, Twin Cities Minnesota Real Estate

Interesting!  Here are my thoughts:  if it's a cash sale, there's no problem, seller can give cash back to the buyer.  If there's mortgage financing involved, all parties have to follow lender guidelines, so no more than 3% (of purchase price) of seller's $$$  paid towards buyers expenses, and no cash back to buyer.  It seems to me it's an advertising gimmick.

May 05, 2010 02:17 AM #2
Rainmaker
313,378
Glenn Roberts
Retired - Seattle, WA

I think it goes beyond a novel idea. I think CB is tripping on some bad advice. They want the seller to carry on the Mr. Rogers "your entitled" to something wonderful just because you're you tradition. Legal or not in one state or another, I feel it's time to stop coddling buyers with gifts to get them to buy. It's time they realize that prices are great and interest couldn't be better. If you want to buy a home, save up some money and then go get one.

May 05, 2010 02:17 AM #3
Rainer
231,245
Shannon Lewis
Beringer Realty - Champaign, IL
Realtor, Broker - Champaign-Urbana, IL

I'm not a CB agent, but recently I talked to a friend of mine (not an agent) who's in the process of selling his house in Colorado. His real estate agent works for CB and he received this same letter in the mail. He was not upset with his agent  (in fact, he had wonderful things to say about her) but he was pretty mortified that CB would initiate a "giving" program in which their customers are the ones doing all the giving, and CB gets the credit.

May 05, 2010 02:17 AM #4
Rainer
78,190
Katherine Fornale
REMAX REALTY 9 - Howell, NJ
SFR, GRI

My thoughts exactly, Bob, I saw the commercial on tv.  The commercial did say "on selected properties" which, I assume, are the ones where sellers agree to.  I think the commercial was misleading in that viewers were lead to believe they could only get this credit if they bought through CB. 

May 05, 2010 02:18 AM #5
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778,980
Doug Rogers
Bayou Properties - Alexandria, LA
Your Alexandria Louisiana Agent

As a seller this would make me upset. If I decide not to participate this means less advertising bucks will be spent on my listing.

May 05, 2010 02:36 AM #6
Rainer
128,374
Linda Powers
Resort Realty - Duck - Duck, NC
On the Outer Banks

Bob,

Thanks for presenting this information. Great advertising gimmick. Too bad CB expects clients to pick up the bill. The buyers who choose a property where the sellers elect not to participate must feel ripped off.

Buyers and sellers simply need to find an agent who works hard for their clients and forego TV ads and gimmicks. If it sounds too good to be true ...

May 05, 2010 03:29 AM #7
Rainmaker
678,494
Cynthia Larsen
Cotati, CA
Independent Broker In Sonoma County, CA

I hope borrowers are informed that if their closing costs are less than the bonus, that the remainder will be going back to the seller. (At least that is how it works here in California).  This promotion doesn't seem to benefit anyone except CB.

May 05, 2010 05:02 AM #8
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3,670,923
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Bob, now that is an interesting program!  And you're right about the appraisal issues. 

In this area, a lot of properties got bid up to over $8000 above the asking price, often without appraisal contingencies in the contracts.  It'll be interesting to see how the prices play out now that the credit has ended.

May 05, 2010 06:07 AM #9
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3,001,105
Paul S. Henderson, REALTOR®, CRS
RE/MAX Northwest. - Tacoma, WA
Tacoma Washington Agent/Broker & Market Authority!

As a former CB agent I can tell you the first pound of flesh usually comes from the CB agent...
Have a great Wednesday Bob!
Paul

May 05, 2010 06:38 AM #10
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Anna Banana Kruchten CRB, CRS 602-380-4886
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana!

Just another not so great marketing idea on a corporate level in the long run. Short term I can see why they thought it might fly. I agree with Paul - the first pound of flesh will come from the agents.

May 05, 2010 01:53 PM #11
Rainer
74,546
Lisa Stafford
Broken Arrow, Tulsa, McGraw Realtors - Broken Arrow, OK
Broken Arrow OK Homes For Sale

Bob..........I would think that is treading on very thin ice.  I shouldn't take long to see if it works as they planned.

May 05, 2010 02:19 PM #12
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