Lavish gifts lure home sales amid high interest rates
From impossible-to-get tickets to Taylor Swift’s concert in New York City and a $6,000 Vespa — to expensive gym memberships and cars — high-gloss gifts to facilitate home sales are at an all-time high.
These gripping incentives are in response to a slowing real estate market, industry experts say. That means a decline in sales due to increased interest rates, combined with nervousness among potential buyers in an uncertain economy and increased fears of a recession.
“As a general rule, the more the market falls, the greater the benefits buyers and brokers can expect,” said Taylor Marr, chief economist at international brokerage and research firm Redfin. “These are in addition to sellers who are also lowering their asking prices.”
According to a recent analysis by Redfin, about 46% of sellers in the US offered gifts at a sale, a record high in the past decade. In New York, where real estate sales are down 38% year-over-year and prices are down 3%, one in six sellers dangled a gift to woo a new owner – and one expensive besides. Marr says the value of the average gift is between $5,000 and $10,000, with some as high as $80,000.
“We’re seeing an unprecedented number of these incentives out there,” he said.
Given the plethora of luxury developments hitting the market, most of the gifts are offered by developers at the sale of new properties.
CPPC Development, for example, dangles that $6,000 Vespa motor scooter to entice buyers to bite into a new $2.75 million three-bedroom apartment at Three99, 399 E. Eighth St., in Manhattan’s East Village. It’s a gift that has created a lot of buzz, according to fellow Brown Harris Stevens public agent Malessa Rambarran.
“We’ve had a lot of excitement about the Vespa and have now put in an offer for the apartment partly because of that,” she said.
NOVA, a new condo project in Long Island City, throws in $25,000 worth of flexible furniture from contemporary design brand Bumblebee with every purchase, says developer Joe Stern of SB Development. Bumblebee, a San Francisco company, creates robotic modular pieces, such as beds that drop lower from the ceiling, to create more space in smaller living spaces.
“I wanted to sell units quickly when I saw marketing slacken this winter, and given that square footage is at a premium in New York, I thought incorporating space-saving furniture would help,” Stern said.
The strategy has been effective, according to Stern — 53 of the 86 units have been sold so far, and many buyers commented that they love the benefit. Ankur, a marketing executive who wanted to be referred to by his first name only for privacy reasons, recently purchased a two-bedroom apartment at NOVA and says the furnishings attracted him.
“The building has a great view and design, and the gift helped seal the deal,” he said.
In another case, One Wall Street—an office-to-apartment conversion in the financial district—includes two extras with every purchase. There’s a membership to the building’s 7,000-square-foot Life Time fitness club, worth at least $280 a month, and access to a 6,500-square-foot WeWork-style co-working space equipped with meeting rooms, podcasting equipment and private telephone booths.
The gifts even extend to real estate professionals.
At The Huron in Greenpoint, the developer gave away two sets of Taylor Swift concert tickets to brokers in January with the aim of generating buzz and scoring signed contracts before the official sales start.
“We wanted to test the market by offering a fun gift that was in high demand,” says Sales Director Kayla Lee. More perks in the same vein are in the works, she says, including vacations to Miami and lavish dinners with wine pairings.
Agents say the range and price of gifts vary in the market. In the current environment, expensive and eye-catching is the trend, according to Michael Valdes, the chief growth officer and president of the real estate company eXp.
“Holidays and cars are the norm, especially in off-market resale offers,” he said. “I know of a recent $15 million off-market resale of a Hamptons home that came with a Lamborghini. And $25,000 Amex gift cards are pretty common.
On the tech side, Extell Development, behind Brooklyn Point in downtown Brooklyn and One Manhattan Square in downtown Manhattan, lowers buyers’ mortgage interest rates by 2% per annum for the first three years of their loans. Assuming 75% financing, buyers can save $54,225 on a one-bedroom purchase at One Manhattan Square and up to $250,875 on a three-bedroom purchase. It’s a bonus that has been a huge success, said Ari Goldstein, Extell Development’s senior vice president of development.
“We have seen an increase in the number of inquiries and contracts signed,” he said.