From impossible-to-score tickets for Taylor Swift’s New York City concert and a $6,000 Vespa — to pricey gym memberships and cars — high-gloss gifts to facilitate home sales are at an all-time high.
These catchy incentives are in response to a slowing real estate market, industry experts say. That means a drop in sales due to increased interest rates, coupled with jitteriness among potential buyers amid an uncertain economy and increased fears of a recession.
“As a general rule, the more the market drops, the greater the perks that buyers and agents can expect,” said Taylor Marr, the lead economist for the international real estate brokerage and research firm Redfin. “These are on top of sellers dropping their asking prices too.”
According to a recent Redfin analysis, around 46% of sellers around the US offered gifts with a sale, a record high for the last decade. In New York, where real estate sales are down 38% year-over-year and prices are down by 3%, one in every six sellers dangled a gift to woo a new owner — and an expensive one, at that. Marr says that 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 glut of luxury developments debuting on the market, most of the gifts are offered by developers on sales of new properties.
CPPC Development, for instance, is dangling that Vespa motor scooter valued at $6,000 to entice buyers to bite on a $2.75 million new three-bedroom condominium at Three99, 399 E. Eighth St., in Manhattan’s East Village. It’s a gift that has generated much buzz, according to co-listing agent Malessa Rambarran of Brown Harris Stevens.
“We’ve had a lot of excitement about the Vespa and now have a bid on the apartment in part because of it,” she said.
NOVA, a new condo project in Long Island City, is throwing in $25,000 worth of flexible furniture from the 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 lower from the ceiling, to create more room in smaller living spaces.
“I wanted to sell units fast when I saw the marketing softening this winter, and given that square footage is a premium in New York, I thought that including space-saving furniture would help,” Stern said.
The strategy has been effective, according to Stern — 53 out of 86 units have sold so far with many buyers commenting that they love the perk. Ankur, a marketing executive who asked to be identified by his first name only for privacy reasons, recently bought a two-bedroom at NOVA and says that the furniture drew him in.
“The building has great views and design, and the gift helped seal the deal,” he said.
In another instance, One Wall Street — an office-to-condo conversion in the Financial District — includes two extras with every purchase. There’s a membership to the building’s 74,000-square-foot Life Time fitness club, valued at least at $280 a month, and access to a 6,500-square-foot WeWork-like co-working space that’s outfitted with conference rooms, podcasting equipment and private phone 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 in January to brokers with the aim of generating buzz and scoring signed contracts before the official launch of sales.
“We wanted to test the market by offering a fun gift that was very much sought-after,” said sales director Kayla Lee. More perks in the same vein are in the works, she says, and could include vacations to Miami and lavish wine-pairing dinners.
Agents say that the range and price of gifts vary across the market. In today’s environment, expensive and head-turning is the trend, according to Michael Valdes, the chief growth officer and president of the real estate firm eXp.
“Vacations and cars are the norm, especially in off-market listings of resales,” 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 technical end, Extell Development, behind Brooklyn Point in downtown Brooklyn and One Manhattan Square in downtown Manhattan, is reducing buyers’ mortgage interest rates by 2% annually 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 for a three-bedroom. It’s a bonus that’s been a huge success, says Ari Goldstein, Extell Development’s senior vice president of development.
“We’ve seen a rise in inquiries and signed contracts,” he said.