As just one example of the real estate slump, Connecticut homes have declined in value in the past few years. Brokerage firms are using cash back rebates for buyers to stimulate sales of homes. The source of the cash is the broker’s portion of the sales commission. Typically, the seller’s broker gets 3 percent and the buyer’s broker also gets 3 percent. With cash back rebates, Connecticut brokers are rebating to buyers 2 percent of their commission.
This creates a win situation for the buyer, the seller and both brokers. Sellers who are at a financial disadvantage are able to sell a home beyond their means. With lower prices and cash rebates, buyers who may have been unable to buy a home can now become home owners. Both the buyer and the seller’s brokers make a sales commission, and the buyer gets some extra cash just when he may need it the most.
Cash back rebates are not the traditional way of doing business for brokers. One brokerage firm in Connecticut called SGI Realty One actively advertises the cash rebates and targets its business to buyers. This innovative method of stimulating sales has worked for the firm and its customers. The economic environment of 2008 was the impetus for cash rebates. With unprecedented foreclosures and so many home owners in a financially precarious position something needed to be done to counteract all the challenges facing the real estate market.
There are two sides to these real estate stories. Home owners who had adjustable rate mortgages could not keep up with escalating mortgage payments. The market saw an unprecedented amount of foreclosures and short sales. Home prices dropped and suddenly people who could not afford to buy a home found that they could become a homeowner. Brokers saw an opportunity to encourage buyers and earn commissions. Getting 1 percent of a commission beats getting 3 to 6 percent of nothing.
A look at the data from Bethel, Connecticut shows that in 2006 the low, mid, and high prices of homes were $306,000, $419,000 and $551,000 respectively. As of the first quarter 2010, the home values fell for low, mid and high prices to $196,000, $319,00 and $363,000 respectively. These facts put many individuals in a financial bind. The result has been creative financing with cash back rebates to stimulate the market.
SGI Realty One’s promise to rebate 2 percent of the sales commission comes in writing before the potential buyer purchases a home. There is a schematic shown on the SGI Web site demonstrating the flow of a home’s sales commission. Cash back rebates have proven to be a practical solution to the problems of many.
As your broker, SGI Realty One will work to get the buyer the lowest price possible. Buyers need this type of representation, since seller’s brokers aim to get the price as high as possible. Buyers’ rebates are guaranteed long before a home is purchased. SGI will do a lot of the legwork for the buyer, and get the buyer a cash rebate.
Connecticut homes and brokers offering cash rebates to buyers is not an isolated trend. Rebates are happening all over the United States. There is an overload of homes for sale on the market today. The law of supply and demand has gone into effect and housing prices have dropped. With SGI Realty One, buyers can look for a home to purchase knowing that the price will be fair. For buyers, the cash rebate is a silver lining to the real estate cloud. Hopefully the clouds will clear and real estate will be able to see the sun once again.