Weekend Argus (Saturday Edition)
When market is tight, incentives are bright
From free cars to apartments, estate agents go all out to get you on board during tough times
BUYING a property these days could get you more than you bargained for – in a profitable way.
In addition to your bricks-andmortar purchase you could come away with shopping vouchers, holidays, or even a Ferrari and or a free apartment.
Estate agencies offer similar services at more or less the same prices, so it is important for them to look for a point of difference, says Lita Hartman, marketing representative for Seeff across the Winelands, West Coast, Port Elizabeth and Cape Town North.
While service is a key point of difference, incentives are something many agencies and developers are using, especially in the tougher market. In a highly competitive environment, agencies are looking to stand out from the crowd.
Seeff, for example, offered three R50 000 holidays (travel arrangements only, no cash pay-outs) to sellers who signed a sole mandate with the group and where the property sold within the mentioned time.
“The incentive was to attract sole mandates, the bread and butter of the industry,” says Hartman.
The “reward” was coupled with a competition for the agents in which two R25 000 holidays were awarded – one to the agent who sold the most sole mandates and another to the agent who sold the sole mandate with the highest value.
It is not uncommon for developers to offer incentives, Hartman says, because they often have the budget available and need to achieve a large volume of sales in a short time.
One such incentive in 2016 was a Ferrari California 30 convertible worth R4 million.
Purchasers of Polo Village luxury apartments were automatically entered into a draw. Each entrant had an 11 in 56 chance of winning the sports vehicle, Hartman says.
There were also two instances where properties were sold via private lotteries. In one, 9 999 tickets, at a cost of R1 658 each, were being sold, with the prize a Val de Vie home valued at R5.7m.
Pieter Piek, a property investment consultant at Just Property Invest, says incentives are a “clever way” to give the purchasers a discount without lowering the price of a development and stopping capital growth.
The trend will “definitely” continue, he says.
“More and more developers are already including appliances in their development to give them an edge in the market.
“Just Property Invest always incentivises our prospective investors with levies, rates or even rental guarantees.”
The incentive movement has been happening globally for years, says Richard Hardie, chief executive of Knight Frank Residential. South Africa is still evolving in this regard, but at a “rapid pace”.
The offering of rewards will be mainly seen when selling its new estates, he says.
“It’s not necessarily about the industry changing. It is more market and product-related. If the market is slow you will see more incentives. If there are two developments launching at similar times in similar areas, you will see incentives to persuade the buyer.”
Although Knight Frank Residential has no plans in the foreseeable future to offer incentives, Hardie says “we can’t rule it out””.
“It depends on market, location, the developer we are working with and price point.”
Asked about the most extravagant giveaway, he says: “A Jaguar parked in the garage. For the full asking price of the home, you got the car.”
Apartments have also been given away to buyers in some developments.
Greeff Christie’s International Real Estate has been using select competitions since 2016.
“It adds excitement, is a creative way to incentivise the process of selling your home, and it sets us apart from our competitors,” says chief executive Mike Greeff.
In 2017 Greeff ran a competition in which the winner was given a two-person rail trip from Cape Town to Pretoria.
Whether the incentive trend will continue, Greeff says, will largely depend on the marketing spends and/ or budgets of real estate companies.
“Competitions will likely continue to be used a tool for securing mandates or creating brand awareness.”
Property developers have been involved in promotional incentives for “a long time”, says Retha Schutte, regional executive in Pretoria for Pam Golding Properties.
As an example, she says there is sometimes the opportunity to win a house or a car.
“To participate in a competition, entrants must provide certain information, including their contact details. While the exercise is to a large extent about generating awareness and interest in a property development, it is also part of a lead generation strategy.”
The Chas Everitt International Property group has also run competitions and offered special deals to winners in its big birthday years, says chief executive Berry Everitt. Discounts on attorney fees (50%) have also been negotiated on distressed properties.
“However, we generally don’t like monetary incentives because they encourage consumers to look for bargains rather than seek out the world-class service experiences they should demand from agents.”
While incentives are more commonplace in tougher times and are “not necessarily a bad thing”, Brendan Miller, chief executive of Sotheby’s International Realty on the Atlantic Seaboard and City Bowl, says they cannot replace personal service, experience, and extensive marketing.
“During times when every cent counts, we prefer to spend on additional marketing and personalised service to achieve an expedient sale or find clients their dream home.”
Buyers and sellers should always do their homework before appointing an agency, and not appoint one solely for the incentive offered, says Chris Cilliers, chief executive and principal for Lew Geffen Sotheby’s International Realty in the Winelands.
While more incentive schemes may be seen in the future, meeting the needs of the client is more important , says Charles Vining, managing director at Seeff Sandton, which has also offered incentives and competitions in the past.
“We’re working hard to meet the needs of buyers who often feel overwhelmed by everything available online, and sellers who are in a competitive market.”