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With the downturn in the housing market, home builders are throwing in everything, including an upgrade on the kitchen sink, to help bolster home sales.

“We offer a variety of incentives every year,” said Hubbell Realty Co. President and CEO Rick Tollakson. “There are a little bit more this year because we want to get people out and get the product moved.”

Consumers are slowing spending amid the housing market downturn and credit crunch, but local home builders and residential real estate companies are using a variety of promotions to help keep sales flowing.

“In this market, consumers are very focused on payments and being able to afford a house,” said Brennan Buckley, vice president of marketing for Iowa Realty.

According to data collected in a recent survey by the National Association of Home Builders, 44 percent of the builders surveyed nationally in January 2008 are including optional items with a home sale at no charge. That figure is down from 52 percent a year earlier, and up from 31 percent in January 2006.

The optional items might include upgrades on cabinets, flooring or appliances, paying closing costs, “things that do not change a house,” said Stephen Melman, director of economic services for the NAHB in Washington, D.C.

Builders’ promotions

In Greater Des Moines, builders are contributing to the national numbers by making their own deals.

Builders with Hubbell Homes construct speculative homes, or houses built without having buyers lined up beforehand, so when the product is finished, Tollakson said, they “need to move it.”

Hubbell Homes is focusing on selling its Brownstone homes, located at Creekside in Ankeny, The Legacy in Norwalk, GreenWay Crossing in West Des Moines, Glynn Village in Waukee and Johnston Commons in Johnston, in the spring market, Tollakson said.

Promotions offered on the Brownstone homes include no closing costs, no payments for three months, no homeowners’ association dues for one year and no electric bills for one year. The buyer can choose one or more of these perks, up to $8,500 in incentives, with the total amount not to exceed 5 percent of the purchase price.

“Rather than reducing the price, you try to get people’s attention,” said Jarad Bernstein, a Hubbell spokesman.

The incentives are also stretching beyond typical offers of no closing costs and covered payments for homeowners’ dues.

For Hubbell Homes’ Fourth Street Condos, the first 10 buyers can choose from either a “night out on the town” package, $4,000 to spend on Homemakers Furniture Inc. Urban Spaces furniture and design consultation or a 2-to-1 interest rate buy-down (prepaid interest rate buy-down to obtain a 1 or 2 percent lower interest rate for the first one or two years). The night out on the town package includes two season tickets to the Civic Center of Greater Des Moines’ Betts Broadway Series, two season tickets to the Iowa Cubs, a partial season ticket package to the Iowa Stars, two season passes to the Science Center of Iowa, two tickets to the Alive Concert Series at Simon Estes Amphitheater and a $200 gift card every other month to the restaurant of the buyer’s choice.

Regency Homes is also giving its buyers options in the incentives it is offering (http://www.regencyhomes.com/Promotions/Index.cfm ).

“The buyer can pick what best suits them based on their situation,” said Alan Sprinkle, senior vice president of operations for Regency. “Different things help different people.”

Starting on Feb. 15, Regency began offering a month long promotion on its single-family homes, including money toward a decorating allowance, electronics or a home theater, design studio personalization or moving costs. The buyer is allotted $5,000 or $3,000 for a new or existing Millennium (starter home) series, respectively. Regency is offering $7,000 and $4,000 toward promotions for new and existing homes in the company’s Infinity home series (homes with additional amenities), respectively.

“(The promotions) are based off what people are writing in on offers,” Sprinkle said. “It’s what they are asking for.”

For multifamily homes, townhomes and condominiums, buyers can choose two out of three options, including no homeowners’ association dues for six months, no payments for three months or no closing costs.

Though the incentives may be appealing, builders can only offer so much before the value of the house drops, causing the promotions to possibly be limited by lenders.

“(The lenders say,) ‘Don’t tell us the house is worth X when it is really Y,'” Tollakson said. “We prefer to keep the value of the house higher because we have more houses to sell.”

Choose your marketing

One Greater Des Moines real estate group began offering flexible commission prices to encourage home sales.

“(Sellers) get more marketing for their money,” said Steven Wolvers, owner of Re/Max Suburban Real Estate Inc. and owner and team leader of the Wolvers Pack.

Starting in December, customers of the Wolvers Pack could choose between paying 5, 6 and 7 percent commission on the final sale price (http://www.wolverspack.com/flex.html ), but the amount of marketing varies with the payment.

At 5 percent, sellers still get marketing efforts such as listings on 20 search engines, TV and radio commercials and a virtual tour of the home. At 7 percent customers get additional search engine listings, more commercials on TV and radio and full-page print advertisements.

“It’s pretty black and white,” Wolvers said. “Basically, everything is laid out in writing so they know what they are getting from us.”

The NAHB’s Melman said more builders are using real estate agents to help sell their homes. “Now you really have to use marketing and really have a good strategy,” he said.

According to the latest NAHB/Wells Fargo & Co. Housing Market Index released last week (http://www.nahb.org/generic.aspx?sectionID=134&genericContentID=530 ), February sales conditions for single-family homes increased one point to 20. Despite the increase, home sales are still low; any number over 50 indicates that builders view sales conditions as good; under 50 indicates poor. In January 2005 the index hit 70. The index gauging sales expectations for the next six months fell one point to 27. The index gauging traffic of prospective buyers climbed five points to 19, its highest level since July 2007.

The HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months. The survey also asks builders to rate traffic of prospective buyers. Scores for each component are then used to calculate a seasonally adjusted index.

“None of these (incentives) are working 100 percent,” Melman said. “One is not the silver bullet that is going to sell all the homes, but with the combination we are seeing movement.”