The latest residential sales tactic: depreciation guarantees
by Michael Hinman

SARASOTA - Median sales prices of existing homes and condominiums are slowly coming down in the Sarasota and Bradenton markets, prompting at least one big name developer here to make a guarantee to buyers.

Sam Hamad, CEO of Enterprise Associates of Sarasota, says he's offering buyers at his Marquee en Ville luxury condominium development and Marquee on the Bay the option of buying now no matter how the market fares in the next year or two. In fact, if the unit value goes down, Hamad said he would write a refund check.

"It takes away a lot of the risk and a lot of anxiety that people have while waiting for the market to change," said Hamad, who is building the 29-unit Marquee en Ville and the 15-unit Marquee on the Bay on Sarasota's Cocoanut Avenue and on the corner of Main and Gulf streets.

ARE INCENTIVES NEEDED?

Construction at Marquee en Ville is complete, with five units left to be sold, Hamad said. Whoever buys the units can opt to have independent appraisals done after a year or two to ensure that the value holds. Marquee on the Bay isn't built yet, but Hamad is offering a similar deal for those who commit to purchasing a unit now, giving them a chance to appraise again when they close.

Kathy Roberts, CEO of the Sarasota Association of Realtors, said she feels there probably isn't a lot of risk in Hamad's incentive plan, especially since she believes the market is rebounding.

"He may feel comfortable that the prices aren't going to go down any further," Roberts said. "Our market appears to be recovering. The bottom of our median price probably happened in the fourth quarter of 2006, as the first and second quarters of 2007 are up."

Hamad also believes his risk is limited, but not a lot of buyers know that, he said.

"I'm taking the risk away from them because I am taking the risk myself," he said. "It will hopefully create some interest with real estate agents and with the potential buyers so that they'll at least come in and kick the tires."

Not everyone is needing to use incentives to bring in buyers, however.

"We're not all for incentives since we are on the custom building side," said Christopher Hilgeman, owner of Christopher Homes in Sarasota. "Our quantity levels are probably not near where some of the incentive builders want to be at. We just have a different approach to building."