Paid Off Closing Costs: Borrowers Point to Favorite Buying Incentive

In a buyer’s market, home mortgage applicants have the luxury of unique perks and savings. Builders and sellers sweeten deals through a variety of incentives.

But which are most appealing to consumers?

Based on a recent poll, it’s not even close: fully paid closing costs.

“Not surprising, this would represent a bottom-line savings of several thousand dollars in normal closing cost fees and services,” said Michael Bearden, president and CEO of HouseHunt, Inc., a consumer-oriented Internet firm which conducted the national e-mail random survey. “In contrast, only two percent of respondents chose a paid trip or vacation as their top incentives.”

Placing a distant second in the homebuyer incentive survey (see chart) was “free upgrades,” with nine percent of the vote. In third place at six percent was “free property inspection.” Other incentives include buy-downs on various kinds of mortgages.

Even with the slowdown in overall U.S. market activity and price appreciation, existing home sales for 2006 are expected to be the third best in history at 6.47 million. The most balanced market in eight years between buyer demand, seller supply and the inventory of unsold homes - achieved in the second quarter of this year - is expected to continue for the first half of 2007.

“As a result, today’s consumer buyer can afford to be more patient and more selective in the home buying process,” Bearden said. “Successful buyer incentives are more bottom line, like free closing costs and free upgrades. Likewise, real estate agents have to be more responsive with fast, effective communication with customers.”