This article ran in the Daily Journal of Commerce about us a couple of weeks ago:
Hybrid house-hunting
by Kennedy Smith
07/19/2006Daily Journal of Commerce Photo
The National Association of Realtors hasn’t heard anything about it, not even anecdotally. Neither has the Portland Metropolitan Association of Realtors (PMAR), nor the American Automobile Association, Fannie Mae, nor any other usual suspects.
Realtors trading in their cars for hybrids barely qualifies as a trend. In fact, it’s barely on anyone’s radar, but two agents in town have done it, and they’re hoping it will lead to a larger client base.
Last winter, Charles and Jennifer Turner of Prudential Northwest Properties bought a Lexus RX 400h, a hybrid luxury sport utility vehicle. Then, just last month, they traded in their gas-only SUV for a second RX 400h.
As real estate agents, the Turners are in their vehicles a lot, and their cars are often their offices. Each drives about 20,000 miles per year, compared with the national average between 10,000 and 15,000 per car, according to the U.S. Department of Transportation. With the price of fuel steadily rising, driving a premium-gas-only SUV was starting to affect the couple’s bottom line, Charles said.
Because the couple racks up 40,000 miles together annually, transitioning to a hybrid seemed like the best business decision, as well as the “socially” responsible thing to do, Charles Turner said.
Responsible, yes – Turner figures he now saves about $800 for every 10,000 miles of driving, with gas mileage of around 25 miles per gallon. But even more so, their decision to switch to hybrid is potentially profitable, he said.
“Clients are impressed with it,” he said. “With the number of Realtors there are, the more we can differentiate ourselves between Joe Schmo and us, the better. There’s a great disparity of age and quality of cars in our parking lot on any given day, and I think our clients sense that and probably want to be in a higher-end car.”
The gamble – “paying $4,000 to $5,000 more than we wanted to or needed to” – pays off in two ways, he said.
First, there’s the marketing clout: “It only takes one or two good clients making the decision to use us based on our vehicle,” for it to pay off, he said.
Second, the Turners receive a tax credit on their purchase.
Hybrid car incentives – full-dollar tax credits from the Internal Revenue Service – took effect Jan. 1. For most hybrid car buyers, the new credits are more valuable than the prior federal tax incentives, which were only offered as reductions of taxable income.
Under the new rules, the Turners are set to receive $2,200 in tax credits per vehicle.
But with the marketing and tax advantages of switching to hybrids, why aren’t more real estate agents going the way of the Turners?
Capacity is Realtors’ greatest concern
The answer is that with the advantages come downsides for real estate agents who want to make the switch, said Jane Leo, governmental affairs director of PMAR.
The issue for Realtors, Leo said, is that there simply are not very many options for hybrid cars with enough room to fit the clients they escort around town.
“A Realtor tends to take more than one person with them, so the car has to fit that capacity,” Leo said. “The only one that I have seen is the Lexus RX 400h.”
Turner recalls having the same issues when he and Jennifer decided to switch to hybrids.
“We pretty much figured we wanted another hybrid, but the problem with the sedans is that they’re too small to be a good real estate car,” he said. “Will Realtors adopt them? Who knows? I think part of the problem is that until now, really this was the first luxury SUV that was hybrid. Maybe (other hybrid SUVs) will show up and they’ll become more mainstream, but are people willing to pay the extra to get into the hybrid in the first place? I don’t know.”
It doesn’t look likely in the near future, Leo said.
“I participate in a lot of committee meetings, and the loose conversation usually revolves around something technological – somebody got a new Palm Pilot or navigation program,” she said. “I have not heard any talk about switching to fuel-efficient cars.”
There are tax-credit downsides as well. The IRS’s new tax credit sets a limit of 60,000 hybrids per carmaker. Toyota hit the 60,000 mark last month. Buyers have until Sept. 30 to purchase one of the five gasoline-electric hybrid models sold by Toyota and Lexus to qualify for 100 percent of the credit. After Oct. 1, the tax credit will be reduced by half.
Furthermore, in order to receive tax credits, the vehicles must be placed in service between Dec. 31, 2005 and Dec. 31, 2010. The original use of the vehicle must begin with the taxpayer claiming the credit, and the credit can only be claimed by the original owner of a new, qualifying hybrid car.
For the Turners, the only disadvantage to having hybrids so far has been “the plainness of having two almost-identical cars,” Charles Turner said. “But our motivation was that we can advertise this. That’s what we do.”
The purchase of the hybrids probably has two functions for these two agents. The first is that they are going to save a ton of money on gas. The second is that it may differentiate them from the competition. It did after all result in an article and blog review.
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