March 17, 2009 – (RealEstateRama) — Home builders may be underestimating the mileage they can derive from the recently enacted $8,000 tax credit for first-time home buyers and should be doing whatever they can to actively promote it with their prospective buyers, according to residential marketing experts participating in an NAHB teleconference on March 16.
“Home builders and their sales and marketing teams can use the credit to clear off excess inventory,” NAHB President and CEO Jerry Howard told the more than 900 association members who called in for the presentation, which included a question and answer session on specifics of the provisions governing the use of the credit.
Suggesting that it is “the best kept secret in the world” in quarters of the housing industry where it can do the most good, Dan Levitan, MIRM, CMP, of Levitan and Associates in Fort Lauderdale, Fla., noted that “except for large and regional builders, we are not doing what we should to promote this tax credit.”
Big builders have placed major banners heralding the tax credit on their Web sites, Levitan said, and Lennar and Centex have added flash productions that enable visitors to click through to information explaining the credit and the availability of attractive mortgage interest rates. “This shows us how important this tax credit is to us today in getting the buyer motivated and giving us an excuse to get in contact with that prospect and get them excited,” he said.
While the marketplace has remained slow since the credit became available as part of the massive stimulus package signed into law on Feb. 17, Levitan said that production builders are reporting that they have sold homes based on the availability of the credit in tandem with other programs they have been running to attract reluctant buyers.
“We are using it as a tool to stay in contact with our customers and differentiate ourselves from others who aren’t promoting the credit,” Levitan said.
Educating consumers about the credit is key, and NAHB has created a detailed list of frequently asked questions that association members can deploy to provide information to the home-buying public at www.federalhousingtaxcredit.com. Members of the association can bolster their businesses with a range of promotional materials posted at www.nahb.org/economicstimulus.
The Real Deal
Levitan said that home builders associations have been leading efforts to promote the credit. Among them, the Greater Birmingham Association of Home Builders, in partnership with the Birmingham Association of Realtors®, is highlighting the first-time buyer tax advantage in its “The Real Deal” campaign, a five-day event on April 16-20 that will push sales of new and resale homes listed by members of the associations.
The goal of the program, which can be franchised by other HBAs around the country, is geared to getting the local housing market moving again, and it is being publicized through a television, radio and print media blitz and sponsorships through leading area businesses.
“Get something like this going with your local home builders association,” Levitan advised teleconference participants. When “everyone is working together, we ought to be able to sell tens of thousands of houses this year using the tax credit.”
Gaye Orr, MIRM, CMP, of Coldwell Banker Advantage New Homes in Raleigh, N.C., said that builders need to educate their salespeople on the tax credit if they want their promotions to yield success. “We in the industry should really be up to speed on this. Your salespeople on the front line need to be comfortable with it,” she said. In the meantime, consumers are walking into sales offices “with more questions than they have answers for.”
Although it may take a tax professional to determine for prospective buyers how best to take advantage of the credit, letting people know just a few options — such as how to speed up receipt of the money from the credit — “can get people off the fence,” she said.
The credit also has significant relevance for households in the trade-up market, she said, who have to sell their departure residences first before they can move to a new home, suggesting that not only first-time buyer sales agents need to have expert knowledge on how the credit works.
Combined with the availability of the credit, teaming up with a local financing company to provide financing incentives and convincing the sellers of existing homes to reduce their prices will “help sell departure residences,” Orr said.
She also recommended holding home buyer seminars on the tax credit, an “old school” approach that is “tried and true,” nevertheless. “Mention the word stimulus and people’s eyes start to glaze over,” she said. “Offer past prospects the chance to come in and find out what this means for them.”
Rob Dietz, NAHB’s director of tax issues, said that the credit is “an important benefit,” with 35% to 40% of the home buying market consisting of first-time buyers. He stressed that buyers need to close on their principal residence on or after Jan. 1 of this year and before Dec. 1 to qualify.
To get the proceeds from the credit into the hands of buyers faster, filers can amend their 2008 tax returns to include 2009 home purchases. Although it is no “silver bullet” for monetizing the credit so that it can be used for a down-payment, prospective buyers who know that they will be completing settlement on a home within the eligible time period can adjust their payroll withholdings to save up money for the closing, he said.
Some state housing finance agencies — most notably Missouri, followed by Delaware and reportedly Pennsylvania and Alabama — have or are establishing programs that will lend prospective buyers money against the credit that can be applied as a down-payment.
An audio version of the teleconference is available at www.nahb.org/teleconference.
For more information, e-mail Blake Smith at NAHB, or call him at 800-368-5242 x8583