Wednesday, June 11, 2008

A Free House?

I read about a promotion from a home builder in San Diego where consumers could buy a 4000 square foot house for $1.6 million and get a smaller home by the developer valued at $400 thousand for free. I've even heard car advertisements stating that "if you buy one Altima this weekend, we'll give you another one for free!" Too good to be true?

Find and read the fine print. There is usually ALWAYS a catch.

I've noticed Albertson's doing this alot lately.
You have a deal like, buy 1 package of hot dogs get a free package of buns.
So, check the prices.... hot dogs - for example, $4.49, the buns "so called free" are $1.29
Then look around and check out the other brands of hot dogs - I found Nathan's on sale for $3.00. I found buns on sale for $.79

You gotta watch those marketing guys. They are awefully sneaky fellas.
Basically, the stores have priced the "free" item into the price of the first item.
In some stores they do cut the price in half when you just buy one, but in most supermarkets I have gone to if you did not grab the second carton of milk you would be overcharged for the first carton. Another problem with buy one get one free is that often times you do not need the second item. Suppose that I only consume one gallon of milk every two weeks. If I were tempted into buying a second gallon in a buy one get one free promotion, then the second gallon would go bad before I have time to consume it. That creates waste instead of savings. In the case of getting a second home for free, the buyer has to pay property taxes on the second home and maintain it, and those things certainly are not free. Basically, if there is no need for the second item, there is no point in buying it even if it were "free".

In the case of the San Diego developer, so far they have received one offer on their expensive luxury mansions, but the buyer does not want the cheaper house for free. Instead, he wants the value of the smaller home deducted off his purchase price so if the developer agrees he could purchase the larger home for $1.2 million. I think this guy is quite wise because instead of being liable for poperty taxes on two homes valued at $2 million, he will only have to pay taxes on one property he purchased for $1.2 million. He saw right through the marketing of "Buy One Get One Free", and I think he will really be getting a deal.

Ultimately, it is up to you to see how much you need and how much you are willing to spend. Being aware of the regular price of things also helps you in determining whether a buy one get one free promotion is truly a great deal.

No comments: