Selling Tactics: Buyer's Incentives for a Slow Market

By
Real Estate Broker/Owner with Re/Max Integrity Advantage

In a slowing market, sellers can find it tempting to believe in magic solutions. With unsold inventories growing in most areas, some sellers resort to offering flashy incentives for buyers. Everything from big-screen TV's to vacation packages are being tacked onto listings in the hope of luring in interested buyers.

In truth no amount of flash or gimmickry will change how buyers feel about your home's core qualities, but incentives that appeal to a buyer's wallet can be effective in certain situations. Below are some buyer's incentives that may help set your home apart from the rest:

Paying Points - The current housing slump has placed mortgage concerns in the minds of many buyers. Sellers who offer to pay mortgage points for the buyer (sometimes referred to as "buying down the mortgage") are more likely to attract buyers who are nervous about their monthly payments or interest rate. Each point you pay equals 1 percent of the loan amount, so mortgage buy downs lower both the interest rate and the monthly payment.

Down-Payment Aid - One of the biggest hurdles for many homebuyers, especially first-time homebuyers, is the down payment. Help with the down payment may in many cases be more important to the buyer than the actual asking price itself. This incentive works well for those selling "starter" homes that are more likely to draw first time homebuyers.

Closing Costs Help - Legal fees, title insurance, filing fees - closing costs can add up in a hurry for buyers, typically totaling somewhere between 2 and 7 percent of the total loan amount. Sellers who offer to assist with the closing costs will appeal to cash buyers short on cash

Home Warranty - Including a year (or two) of home warranty coverage serves as a peace of mind for the buyer that they won't have to foot the bill for unexpected repairs in the first year or two of ownership. Most policies include service to the home's HVAC, interior plumbing, appliances and major fixtures. The low cost of home warranties (typically a few hundred dollars) makes them a low risk-high reward incentive to offer.

Maintenance Fees - Some features of a home that you may consider "selling points" (pool, hot tub, sauna, gas fireplace, AC system, etc) can actually seem like detractions to buyers due to their related maintenance costs. You can assuage a buyer's concerns by offering to pay for the first year's worth of maintenance.

Landscaping - Offering to spring for a few additional landscape features can be a nice way to let buyers add personal touches to the property without taking on personal expense. Keep in mind that adding such touches on before putting the home on the market may have a greater impact (provided, of course that your landscaping choices aren't woefully misguided).

Condo/Homeowner's Association Fees - In a condominium complex or planned community, homeowner's dues add to the monthly cost of ownership. If the first year's worth of dues are taken care of by the seller, potential buyers have one less early-expense to worry about.

Price Reduction - Price reductions don't usually come to mind when discussing incentive strategies, but really no single factor is more important than the asking price. A well-timed price reduction can indicate to buyers that you are flexible and serious about selling the home.

Upgrades - In most cases major home repairs and touch ups should be completed prior to putting the listing on the market. However, offering to finance certain aesthetic changes, such as new exterior or interior paint, can be marketed as a means for the buyer to add their own personal touch to the home.

Extras - If you're going to offer a "throw-in" as an incentive, why not tailor the offer to the charms of your home? For example, the antique hutch that perfectly compliments your entryway might be included in the list price. If you've invested time and money in a prized back deck, including a premium gas grill could be a logical pairing. Buyers often view wild incentive offers with skepticism, but "thoughtful throw-ins" don't carry the same air of desperation.

Posted By:

Barbara Mulcahy
RE/MAX Classic Group
908-898-0800
http://www.sellwithmulcahy.com/
BMulcahy@ClassicNJ.com

Serving: Berkeley Heights, Cranford, Mountainside, New Providence, Scotch Plains, Summit, Westfield, Chatham, Long Hill Township, Madison, Basking Ridge, Bedminster, Warren, Watchung, Millburn/Short Hills

  

Comments (3)

Keith Perry
Coldwell Banker - Hiram, GA
REALTOR - West Metro Atlanta

Hi Barbara, this are some great tips for you clients. Hope all is well with you and yours.

Sep 26, 2008 10:05 AM
Keith Perry
Coldwell Banker - Hiram, GA
REALTOR - West Metro Atlanta

Hi Barbara, these are some great tips for your clients. Hope all is well.

Sep 26, 2008 10:06 AM
Christopher Hallmark
The People's Home Mortgage Corp. - Matawan, NJ

Great ideas Barbara.  In this time, you need to do anything you possibly can to creat incentive for buyers.  Please have a look at some of the topics in my blog, there may be something that gives you an idea to add even more value to your customers.

 

Respectfully,

 

Chris Hallmark

Nov 23, 2008 05:19 AM