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August 21, 2006
Buyer come-ons
It seems as if we are seeing a lot of incentives for consumers to buy these days. Auto dealers are offering free gasoline, and builders are promoting things like free swimming pools and kitchen upgrades on houses. N.C. State University economist Mike Walden takes a look at what's going on and offers advice for consumers.
"It’s a sign of the times. Auto sales are slowing, home sales are slowing, so sellers are looking for some hook with which to catch buyers," says Dr. Walden.
"Now, of course, one option is simply to offer the product –- a car or a house -- at a lower price. But oftentimes sellers don’t want to do this because they want to use something that makes them stand out.
"So for example, auto dealers offering free gas for a year. Well, gas prices are high now, so that’s going to get people’s attention. Same thing with house upgrades.
"However, the buyer always has to ask, would they be better off with just a lower price? Maybe you don’t want a swimming pool with your house. Should you buy a house just because it has a 'free' swimming pool?
"So always look at the alternative: Would you be better off just taking a lower price?"
Posted by deeshore at August 21, 2006 08:00 AM