From a plugged-in tipster who’s not a broker (“no idea why they would send me this”) but nonetheless received the following email from Pacific Marketing Associates:
Subject: Brokers! Don’t miss your chance to drive a brand new C-Class Mercedes on us!!!
To quote our tipster, “would hate to think my broker is showing me something so he/she could enter a contest!” Keep in mind that your broker will only get one entry into the grand prize lease drawing for a tour. But for an accepted contract, it’s another five.
∙ Your Agent Might See Value, But Be Sure To Ask For Whom [SocketSite]
Full Disclosure: SoMa Grand advertises on SocketSite, but has provided no compensation for (nor had any prior knowledge of) this post.
There’s no such thing as bad publicity, right?
[Editor’s Note: And we’re damned if we do, damned if we don’t. Welcome to our world.]
The only entity benefitting from this is SF Mercedes…
these types of incentives make little to no sense to me. maybe i just don’t understand them. is the theory that if i’m a broker with an incentive, i’m more likely to show my clients place? with the incentive, am i more likely to push my client to buy a place (wow that treads a fine line of unethical behavior!)? maybe this type of incentive works for a particular type of realtor? maybe it works for everyone? maybe no one? if i were a buyer, i’d tell my realtor that he/she should give me the car–why the hell should the agent get the car instead of the buyer?
Ridding in style, huh? What will the broker be ridding himself of?
[Editor’s Note: Along with everybody else, poor editing on SocketSite.]
wouldn’t it be more efficient to give incentives to the buyer instead of the agent? i mean, i imagine most buyers who are spending 600k+ on a condo would already have done some research and are aware of the existence of these high profile projects; why would they even need an agent to introduce them to this building – if they wanted to see it they could have done so by themselves w/o an agent. just give me the incentives directly and i’ll go buy it with or w/o agent.
Man. If I happened to pick up a client who wanted to live in this building I would not want this car. Can you take the cash? This car is an unnatural feeling Mercedes venture into BMW 335i and Audi A4 territory.
Developers don’t like to lower the prices, as it then has a trickle down effect on all the other units they have to sell, and p*sses the existing owners off. Instead they resort to these gimmicks. Tip for buyers, ask for 2-3 years pre-paid HOA, free upgrades, seller to pay all closing costs (including transfer tax). Developers are more likely to do this than lower the sales price.
What’s wrong with this? Sales incentives are not exactly rare, although they may be called “bonuses” in other industries (is that okay?).
Also this is a *drawing* for a *two year lease*, it’s not like they are giving every sale a car — Lighten up, folks! The lease itself is likely being subsidized by mercedes in exchange for ad placement, access to buyer lists, etc.
Aren’t Socketsite readers supposed to be hip, urban sophisticates (making 500k a year) who understand how the world works?
“What’s wrong with this? Sales incentives are not exactly rare, although they may be called “bonuses” in other industries (is that okay?).”
In other industries it’s the agents of the sellers that benefit from incentives and bonuses. In other industries if it’s the buyer’s agent that benefits it’s usually called a “bribe”.
What struck me is that SOMA Grand is using renders in their materials rather than shots of the actual building. An acknowledgement that the real building doesn’t look as good as advertised, perhaps?
What’s another industry in which buyer’s agents incentives would amount to bribery? People in acquisitions, for example, are actually in the employ of the purchasing company. So that doesn’t apply. And remember, who pays the selling (buyer’s) agent in real estate? It is not the buyer but the seller.
What should be done in these situations is full disclosure. If the buyer were to say, “Hey. Half that car is mine!” then talk about that.
According to laws governing sweepstakes they need to provide a method that makes this available to everyone – “No Purchase Necessary” – or in this case, No Showing Necessary. Entries would need to be open to brokers and non-brokers alike. If not, this is an illegal sweepstakes and would be illegal.
Can’t see the fine print, but I don’t think they make this obvious which already makes it unlawful.
Isn’t Soma Grand one of the places with very limited parking availability, IIRC?
Maybe that’s why they’re doing car giveaways for the agents and not their residents… 😉
What’s another industry in which buyer’s agents incentives would amount to bribery?
medicine. there’s been a lot of change in the medical industry for exactly this reason.
my practice won’t even allow us to have cheap pens or notepads from the drug reps.
in the past, docs would get laptops and golf trips and lunches and all that… some (like me) were appalled at such behaviour.
that behaviour is quickly dying. it IS a bribe and has no place in medicine.
and if I’m paying a buyer’s agent 5%, then I had better be the one getting ALL of the incentives. 5% is incentive enough for the RE agent.
as for why they do it? obviously because it works.
Who pays tho? Your model is the inverse of this. In R.E. it is the seller who pays the five points. ANd it is half of that, or 2.5%, typically.
just to be clear flug, the seller pays commissions out of the money from the sale, which comes from the buyer. Not quite as indirect an expense as you may suggest.
They raised prices on the units last week but still offer incentives (to buyers and agents)- this seems kind of odd. I’m considering buying a place there- so wanted to get more info. Thx.
I know, view lover. i do this for a living. But think of it this way. The money is paid to the seller. Once the buyer pays it, the buyer’s part is done. The seller can then do what he/she/it wants with that money. What they do is then honor their separate agreement with the listing agent, who in turn has a separate agreement with the buyer’s agent. That’s the model.
What?! Does it make more sense for the buyer to win a car instead of the broker? Buyer take money out of pocket to the seller and broker. Seller make money and broker make money off the Buyer! So…
US is weird.
flug, I know you are a realtor, and if I didn’t, your spin would cetainly point me in that direction. The problem is that there is no compelling reason to view this any other way. If a seller needs x of profit at y commission and then provides y+1 as an incentive, he really could have lived with x-1 as profit. And the seller should be able to pay z-1. That’s all. I find the discussions here in reference as to why the developer does not want to lower price for example, comical. Lowered prices will piss of previous buyers, this makes no sense to me. Early buyers always are at risk, they stand to make the most in an appreciating market, and conversely, stand to lose the most in a declining market. There are many ways to spin things, and maybe that’s what realtors do, and buyers have had no choice but to go along with it up to now, but times are changing and money is not cheap anymore, so why pay any more than you have to. I think that was the jest of the previous poster you referenced as having inverse logic, or something like that.
It’s Fluj not Flug
2008 Mercedes-Benz C300 lease = $419/mo. x 24 mos. = $10,056 = BFD
2 yrs. HOA @ $600/mo. x 24 mos. = $14,400 (3 yrs. = $21,600) = BFD
Upgrades = ~$50,000 (conservative) = BFD
All of the above incentives together = BFD
———————————————————–
Considering the sale price of one of these units for, say, $700k – $1+M, these incentives (for the buyer) are a joke and an insult to the buyer’s intelligence.
Reduce the damn sale price = I’ll be back at the table to negotiate
Are people really arguing that this is an acceptable business practice? At the very least, it should be disclosed. In the securities industry, it’s completely illegal. The N.A.R.really does a good job (for itself) of lobbying in many ways and maintaining “self-regulation.” The pressure won’t be brought upon them to change practices until a lot of people lose a lot of money/houses.
this just goes to reinforce the truth that real estate agents and brokers are, at best, rarely working in the best interests of their clients and behave in what could be considered unethical and conflicted ways, and at worst, are simple parasites who don’t really offer a service worth what they’re paid and do their mightiest to hold a monopolistic death grip on the buying and selling of real estate in order for their house of cards to not crumble.
In any other profession, a professional representing a client who was offered and accepted financial incentives by the party with whom his client was negotiating would be immediately discredited, barred from practicing, and likely prosecuted.
@ city resident – I think your attack on the ‘parasites’ is misdirected. Shouldn’t you have issue with the seller or developer of this project for dangling such an incentive? Does anyone think that offering a free 2 year lease on a new MBZ is going to help sales at the project? Really?
movingback, there’s one thing you calculations are failing to take into account. They’re not offering a two year car lease, they’re offing a chance to win one. Spread over all of the units in the building, this comes to about $40 per unit.
And it’s probably being offered by the selling realators, not the sellers. In which case it’s coming out of their comission.
@Michael — finally, thank you!
And don’t forget it might be underwritten by mercedes itself. The “winner” is responsible for all other costs, which likely add up to more than the lease. It can only be redeemed in the SF Mercedes office down the street.
@movingback — the program’s purpose is to expose the properties to more people (which would presumably lead to more sales — this is the basis of advertising). It seems like it would do that. Do you disagree?
I’m trying to get worked up over this, but given all the other scams being perpetrated right under our noses (loans, upgrade costs, HOA fees), it seems like people are focusing on the wrong thing 🙂
Has anyone been to SomaGrand recently to get latest sales? Has their agent luring methodology worked? I had shown interest originally and have had an extremely pushy and at times rude sales person there going by Danielle asking that I go and sign the contract given I had put in a (refundable) hold deposit immediately after I told her I would not likely use an agent. After she did this I mentioned the uncertain market to which she replied: “…we sold 19 this week and 14 the week before, what “market” are you referring to? Vacaville? Valejo? Kansas?”
That makes me want to wait longer or just look elsewhere. Has anyone seen similar or can someone confirm the numbers?