Boom & Bust, Part 2
A woman is giving away her $1.25-million mansion in Ocala. The house, replete with two 50-foot porches, three crystal chandeliers, and a hot tub, sits on two acres lush with oak trees, orange trees, azaleas, and gardenias. She will give it — mortgage-free — to the winner of a "pet lovers" essay contest, which is open to anyone of any age.
But there's a catch. Along with the 100- to 300-word essay (and a photo of the pet the essay is about), entrants must send a $200 fee. Why would someone give away a plantation-style spread to a stranger with 300 words and 200 bucks? Well, there's some fine print too. The contest, which began last week and is scheduled to end July 23, can be extended for up to two months if the owner, Clementina Marie Giovannetti, doesn't receive at least 6,250 entries. And if she still doesn't have the required number at the end of those two extra months, the contest is off. She'll refund $180 to each contestant; Giovannetti, a self-described best-selling author, would keep the remaining $20 for processing expenses.
Why exactly 6,250? Likely because 6,250 multiplied by the $200 entry fee comes to $1.25 million — which was the asking price for the property while it was on the market for the past two years. If there are more than 6,250 entrees, that's just profit for Giovannetti, who plans to promote her new book, Caesar: The Greatest Love Story Ever Told by a Dog, over the summer, most likely mentioning the contest a few times along the way. Clever, eh?
Actually the author's scheme is less novel than you might think (though certainly more appealing than the title of her book). Homeowners, tired of the shaky real estate market, have attempted similar essay contests recently in New Mexico, Ohio, and California. A couple in Colorado requires only $100 to enter their contest, and hopes for at least 2,000 entrees. That would be $200,000 for a house that was listed at $169,000 earlier this year.
In South Florida, some sellers are removing their listings entirely, opting to auction their property rather than wade through the sharks who hope to take advantage of desperate sellers and get properties well below appraised values.
"These tricks and crazy approaches to selling houses are nothing new," says Jack Timmins, owner of T&T Realty. Timmins has been a real estate agent in South Florida for more than 30 years. He says he's seen desperate sellers try creative approaches during market downturns for a long time. Now that this area has become one of the most depressed markets in the nation, sellers are offering much more than just the kitchen sink in order to move their properties. "People are willing to throw in everything from televisions to one-year leases on cars to their first-born sons," says Timmins, who offers new, big-screen TV sets with some of the houses he sells. "Some people are willing to pay your kids' college tuition."
Charalane Canfield, an agent for Westpark Realty, has an apartment for sale in Weston where the seller is willing to carry the mortgage. "He's thinking he can make up the difference and sell at his higher price by keeping the interest low," Canfield says. The unit in question includes professionally decorated furniture and a flat-screen TV set in a theater room. It's listed for about $300,000.
High-end condominium developers are also desperate to unload property, according to Zach Finn, owner of Finn Real Estate Enterprises. "Developers are throwing in unbelievable incentives for both buyers and agents. They're doing everything they can to move the units they have left at full price because they've already sold some at that price and they don't want to lower the value of the building. They built these properties expecting to get the market price from a few years ago."
One of the properties Finn shows prospective buyers is Sapphire, a condo building under construction by the ocean in Broward County. The seaside residences are priced from just under $600,000 for a two-bedroom unit to $1.28 million for a penthouse. Incentives started with $30,000 worth of designer furniture included with every purchase, "but flooring packages are standard now," Finn explains. "That's just expected. [Sellers] have to be very creative to impress people in this market." Now Sapphire buyers also get a free two-year lease on a new Mercedes-Benz (choice of a CLK convertible or E-class sedan) and a paid membership to The Club at Harbor Beach Marriott Resort & Spa, which includes a 22,000-square-foot full-service spa, an 8,000-square-foot lagoon-style pool, and 50 beachfront cabanas.
"So many places are selling the whole lifestyle package," Finn says. "It's not just the luxurious penthouse; it's the luxury car downstairs and membership at the best resorts and golf clubs."
Finn says this kind of lifestyle marketing was introduced to South Florida by Donald Trump. When initial sales in the Trump International Hotel & Tower were lower than expected, The Donald offered prospective buyers a choice of cars: a Maserati, a Lamborghini, or a Jaguar. Finn has his doubts about such window-dressing. "Good value is what people are looking for," he says. "The only things selling right now are the exceptional properties at great prices. Short of that, nothing is really working."
Despite the market conditions, Finn recently opened a new, larger office in Fort Lauderdale's Gateway Plaza. He has compensated for the down market by advertising overseas — in London and Paris. "The dollar is down and prices are down.... Europeans are coming over to America on real estate spending sprees."
Finn is trying to benefit from this market in the long run. "Other offices are closing for good," he says. "I figure if I expand now, with the industry where it is now, when it bounces back, I'll be the first broker people call. I just have to ride out the storm."
Another local real estate agent, who asked not to be named, says he's been giving buyers up to 15 percent of his commission, which is generally 6 percent of the selling price. That means as much as $20,000 out of his own pocket on, say, a property that sells for $2 million. He's listing a multimillion-dollar mansion in Fort Lauderdale that includes dock space for a yacht up to 100 feet long. When he added a small boat to sweeten the deal, buyers still balked, he says. So now he's offering an all-expense-paid luxurious vacation for two in the Bahamas.
"I've seen sellers offer liposuction, breast augmentation, anything you want," Timmins says. "The bottom line is that doesn't sell houses. People will wait for the right prices no matter what. That's how the market works."
Timmins says this bear market will be his last. He's getting out of real estate sales to work with reverse mortgages, which let home owners cash out equity and give their property to the mortgage holder when they die. "That's where the future is," he says. "People can cash in on their property and still enjoy it. And somebody else can worry about selling the house."
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