Live Highlands Ranch : Tuesday Tips : Which Seller Incentives Tempt Buyers
Welcome to our new series, "Tuesday Tips", where we'll bring you tips for buying and selling real estate. We hope you enjoy and in the future if you have any topics you'd like to see covered, drop us a line.
Realtor Magazine recently reprinted an article "Incentives Upgraded in Down Market," from The Washington Times which Kathy and I both believe in, when the situation is right. Here are the article highlights along with our comments.
Sellers trying to get buyers attention are offering up plenty of incentives, everything from closing-cost assistance to remodeling credits - even hot tubs, home theater systems, flat-screen TVs and cars, reports The Washington Times.
But these incentives "don't actually make the deal," says Michael Labout, regional vice president of the National Association of Realtors, who recalls one seller who offered up his 1970's Cadillac El Dorado in a real estate deal. "They're as much to get buyers and agents to look at the house as anything."
But sellers may be convinced that the extra buyers these incentives may bring in to view their home may be worth it. Some popular seller incentives catching on:
- Offering a gift card to a home improvement store or a local flooring company if the property you're trying to sell is in need to some remodeling work;
- Covering some or all of the closing costs;
- Offering home warranties, which will cover HVAC systems and other major appliances, usually for a year - although more home sellers are offering warranties that last longer, possibly even up to 4 or 5 years;
- Paying the homeowners association dues for a year or more or covering the first year's property taxes or condo fees;
- Offering a selling agent bonus, such as $2,000 or $3,000 bonus to the buyer's agent may help get the property shown to more potential buyers.
It's true we've seen seller incentives in this market, but which ones really make an impact?
Offering a gift card? While we haven't tried this yet we can absolutely see the benefit to the buyer. Usually items like this might come up more an inspection to smooth things over.
Covering some or all of the closing costs? We don't recommend offering the closing cost assistance up front, in this market if the buyer needs the help their agent should recommend structuring their offer for your home to include this. Why give away several thousand dollars of equity before you've even begun the negotiating process?
Offering home warranties? This can be a great incentive, especially if the home is older. We're seeing bank owned homes often coming with home warranties. We had a client, who closed on a bank owned home this year, who had a plumbing problem their first day and boy did that warranty come in handy!
Paying the homeowners association dues? We almost always suggest this if the home in question is a condominium or town home. This market in Colorado has been the hardest hit and this incentive has helped set our client's homes apart from the rest of the pack.
Offering a selling agent bonus? Who doesn't like to get a bonus? If you're selling a higher end property this might make sense. We would absolutely suggest you don't do the opposite, i.e. offer a co-op that is less than the norm for your area. Listen to your real estate expert here. Again, bank owned homes often come with this incentive which can help to even the field for these often distressed properties.
In the end do you as a seller offer an incentive? Great question. We would first suggest you look at your home and see if the money you would spend on one or more of these incentives be better spent preparing your home to sell, i.e. new carpet, paint, granite counter tops, landscaping, etc. Granted, the market can be incredibly difficult for sellers, but our experience has been if your home is in selling condition the buyers are out there. However, if your home is in that selling condition and no offers are coming in, perhaps an incentive that differentiates your home from others are the market, might just be the answer.
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