25 December 2007

Mainstraem Journalism Finally Recognizes that "Incentives" Distort Reported Home Price

The fact that "sales incentives" are really stealth price cuts has has finally been noticed by the Wall Street Journal.
Buyers, sellers and other market participants typically monitor fluctuating home values through sale records that legally have to be listed with county clerks. But incentives offered to buyers -- ranging from free cars or furniture to cash rebates -- are making those prices less reliable as a sign of what buyers actually paid, netting out the giveaways. And that may be misleading lenders and people shopping for homes, some real-estate lawyers and appraisers warn.
Well, duh.

That is the purpose of these incentives, along with artificially inflating realtor's' commissions. (If the price were cut instead, the realtors would typically take a hit on their commission of over $1000)


Post a Comment