Sweeten the deal

Aside from simply cutting prices, how can developers convince nervous buyers to take the plunge on a new home? Initially it was thought that furniture packages and the tantalising possibility of a big raffle prize could cover up the drop in market value. Now, as buyers’ confidence continues to ebb, developers have begun to offer various insurances against the pitfalls of the market and in one case, even a money-back-if-not-satisfied deal.

Offering sweeteners has been commonplace in the property market for some time. An example at the height of the boom in 2006 was when developer Paddy Gilboy decided to offer a free €21,000 two-berth cruiser as a raffle prize to those who purchased a home in his riverside development in the Upper Shannon. While a raffle ticket doesn’t seem like much reward for a home costing between €285,000 and €385,000, there were only 6 units launched in the phase. So, a quick sales run was considered worth a little under €4,000 per unit.

When the slump hit, the offers got bigger, better and more frequent. Lifestyle packages including high quality kitchens, bathrooms and landscaping became the standard for many new developments. Menolly Homes introduced their “Golden Hello” package which offered purchasers at The Coast in Baldoyle fittings worth between €8,500 and €22,000 depending on the value of their purchase. A Sligo developer went further and held a raffle for a free apartment for anyone who bought one of 12 tax-designated units - priced at €175,000. Buyers at Kings Court in Castlepollard, Co Westmeath were offered the choice of a Fiat Punto or furniture packages worth €15,000 and LM Developments are currently offering a free Volvo C30 with every house purchased at their Alderwood development at Hollystown in Dublin 15. Barrack Homes chose to offer a financial incentive as opposed to material goods. In late 2007 they launched their ‘Fixed Plan’ scheme which would subsidise purchasers’ mortgage repayments for three years on its developments in Newbridge, Kilcock and Ballitore.

Eclipsing all these offers, the deep pockets of DAMAC properties found a private jet and a private island in the Caribbean Sea to raffle to Irish investors who purchased an apartment during the Dubai Shopping Festival earlier this year. The company also offered a free car with each property ranging from a BMW 1 series for a one-bed costing €110,000, up to a Bentley Continental Flying Spur that came with luxury penthouses. Though the properties concerned were not in Ireland, the furniture and Fiat Puntos offered by Irish developers suddenly looked far less appealing.

Aware that buyers see these offers for what they are – a smokescreen to disguise a property’s drop in value - some builders have changed tack. Instead of offering freebies, they are now coming up with novel ways of giving buyers security against the market.

Woodgreen Builders will now guarantee buyers two years rent on their existing homes when they purchase a €395,000 home in Bettystown. Woodgreen say this will give sell-to-buyers the chance to ‘buy while house prices are at their lowest level in years and rent out your existing home at rock solid guaranteed rent for two whole years giving the property market time to recover before you sell your existing house at a potentially far more advantageous time’. Additionally, Woodgreen is offering to arrange the finance for the new home, the letting of the existing home and pay the bill for tax advice.

The most dramatic offer of them all was revealed in the Irish Independent today. The paper reported that Walsh Maguire is offering a “cash back guarantee” to buyers of its new 5-bedroom homes in West Dublin. If you’re not satisfied after 18 months, the developer will buy the home back for the original purchase price. The developer said that the scheme is intended to allay worries about negative equity on the homes which have already been reduced from €695,000 to €595,000. What’s next? Buy one get one free?