If you have a GMAIL account or are a ready of Business Week, you might have found an article about subsidies.

The article talks about subsidies and how they play a role in moving real estate.  It gives the impression that there may be a false ceiling (or bottom depending on how you look at it).  It does not speak directly about numbers or what is being offerred.  Furthermore, it almost suggest that Realtors are the ones pushing this movement.

I can only speak about my experience here in Atlanta, but a typical offer will look like this:

Asking Price: $200,000

Agreed Price $198,000
Seller Pays $4000 in closing
Seller leaves refrigerator or pays $1,000 decorating allowance.

For the purpose of the article, I would consider $1,000 to be a subsidy.  Lenders are getting very tough on this sort of thing.  Heaven forbid you find a home that needs a lot of work, decorating allowances are all but gone.

Each state has a differing view on Closing Costs.  It seems like this article mistakes the seller paid closing costs (the norm in Atlanta) for a subsidy.  Its been my experience in states like New York, they will negotiate the price and tack on closing costs if needed, whereas in Georgia, we negotiate with them as an option included already. 

As for Realtor practices skewing data, it would only take a surveyor to find out this is false as well.  Ask any Realtor what the standard discount on a home is and they likely have an average for the area.

The article is interesting because it's writer is obviously someone who doesn't understand that Real Estate is a market like the stock, commodity or currency market.  Prices go up and down, each market has commissions, incentives and a variety of purchasing options. 

Ooops, I think I rambled too much.

By Rex Nutting

RISMEDIA, May 10, 2007-(MarketWatch)-Stricter lending standards are likely to further erode housing markets this year and next, the National Association of Realtors said Tuesday in its monthly forecast update.

"If it weren't for a favorable economic backdrop, housing would probably have a hard landing," said Lawrence Yun, senior economist for the NAR. "As it is, we see this as a soft landing with home sales rising gradually in the second half of the year and prices recovering a bit later."

Sales of existing homes will probably fall about 3% this year to 6.29 million from 6.48 million in 2006. Sales of new homes are projected to fall about 18% to 864,000, compared with a 14% drop predicted last month. Housing starts are expected to drop 19% to 1.46 million.

"Written By: Minnie Bridgers

Last Modified: 5/2/2007 11:14:07 AM

You may have seen those "You Keep the Commission" billboards around metro Atlanta. They are paid for by real estate companies offering a-la-carte services. These so-called "discount agents" have become very popular as the housing market continues to cool.

So the bottom line is, if you want a full course menu of services and someone to wait on you -– hire the commission-based agent. If it is just as peachy for you to do the leg-work yourself and save some green along the way – give the discounter a shot. You can always hire the traditional agent later if you fail to sell your home the new-fashioned way."

• FSBO - Net 74% of asking price
• Discounter - Net 88% of asking price
• Full Service - Net (including commissions) 90% of asking price

The real AHA here should be while opinions can differ on what agents do before the sale, it's the negotiation skill that's worth the big bucks.  Bottomline, anyone can make a flier, but an experienced, skilled negotiator is worth their commission.