- Unique Incentive Paying Off For CASTO
- Friday, November 23, 2007
- Article from The Columbus Dispatch
- Columbus, OH — In recent years, central Ohio apartment owners have turned to free rent, gift certificates and guaranteed maintenance service to attract tenants. Doing something to help tenants buy a house seems counterintuitive, but that's what one apartment owner is doing. Casto Realty, which manages about 3,500 apartment units locally, has a program that provides cash to apartment dwellers when they buy a house. Casto Realty will refund to its rental customers 10 percent of rent payments for a two-year period if the renters use Casto's buyer's broker services when they purchase a house or condo. Even though they're in essence paying renters to move out, the program has been successful, said Jim Cunningham, Casto executive vice president. "We wanted to give leasing agents more arrows in their quivers than anyone else in town," Cunningham said. "A lot of people wouldn't help you move to that first house." Cunningham said the company uses part of the home-sale commission to reimburse the buyer. Typically, real-estate agents split a commission of 6 percent of the sale price of the home. The commission is paid by the seller. The act of providing the incentive, or in essence splitting the buyer's agent commission, is legal in Ohio. "A real-estate broker or salesman can offer an incentive or inducement to buyers or sellers or tenants to use their services, but they have to disclose that in any purchase agreement," said Peg Ritenour, vice president of legal services for the Ohio Association of Realtors. Cunningham is a licensed broker, and the operation has only one agent. Tammy Stiles helped former renters buy 53 houses in 2006. Cunningham said the sales figure is lower this year because the housing market has slowed, even though the company opened up the incentive to people renting apartments at competitors' communities. Still, the incentive seems to have worked. Cunningham thinks vacancy in Casto's apartments would be 5 percent rather than 3 percent without the buyer's program. Casto Realty provides the full discount only on homes that are purchased for $125,000 or more. It adjusts the reimbursement downward if the sale price is lower because its commission is lower. -- Mike Pramik "If you've got a $1,000 rent (payment) and you're buying a $100,000 house, we'd lose," Cunningham said. "We're not dealing with $500,000 homes, but that first-time homebuyer. The prices are usually in the $150,000 to $185,000 range." Cunningham said he understands if other buyers' brokers question the process. "Regardless if it's $100,000 or $200,000 or $800,000, the motivation with something like that to the buyer is I'm going to get some (payment)," said Christine Dunzinger, a RE/MAX Realtor. Still, Dunzinger thinks Casto Realty's service is not an immediate threat to her business. "Any professional Realtor at the top of their game is not going to be affected or alarmed by that," she said.
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