How to use incentives to sell your home in a tough market
Here are some ways you can sweeten the pot and beat your competition in a sale.
Here in the field we are seeing home prices fall as sellers respond to housing market pressures. Some sellers are still expecting higher selling prices for their homes, but the transitioning real estate market is resisting high prices and causing sellers to re-evaluate their expectations.
It’s a whole new ball game, and if you want to play, you need to know the new rules. Getting an agent to list your home on the local MLS system and waiting for offers to come in is no longer enough. Today, traditional sales methods are not enough to sell your house in a reasonable time for a decent price. Home buyers have too many choices and housing options to choose from. They are driving the market, and your house is just one of many they are evaluating.
The obvious response to the market, which has been embraced by many sellers, but at a price, is to price your home below other comparable homes in your neighborhood. Although many sellers have built in some wiggle room between the selling price and the bottom line, buyers ask for rebates that will significantly erode the seller’s profits, sometimes to zero. Those who have a need to move quickly, say for employment, will even take a loss to offload two mortgages or end up renting. This situation, by the way, offers real estate investors the opportunity to get good bargains.
Even in today’s market, you don’t have to lower the price of your home to the point of taking a loss. There are other ways you can add value to your home, even if it’s just perceived value, that will allow you to make a nice profit and still sell it in a reasonably short time. Using sales incentives can be a very smart and cost-effective way to add value to your home without sacrificing much of the sales price, if any. Here are a few things that can sweeten the pot and make your home a more attractive option to potential buyers:
1. Offer a 3% commission to the buyer’s agent. Some agents will not show your house for less than that and will most likely take it apart in front of the buyer if they show it.
2. If you are in a homeowners association, pay the new buyer’s fee for the first year or more.
3. Purchase a home warranty, which protects all appliances in the home, including heating and air conditioning systems. The cost is usually less than $450 for a year.
4. You can pay all or part of the buyer’s closing costs, which can be deducted at closing from the proceeds of your sale, so you have no out-of-pocket costs.
5. Pay taxes on the buyer’s property for a year or some period. He may have already paid some or all of it anyway. Again, no out of pocket costs.
6. If you have oil or propane heating, give the buyer a full tank of fuel.
7. Offering free lawn mowing or gardening for a period of time.
8. Provide all new carpeting or kitchen appliances or drop off furniture the buyer might want.
9. Offer to pay for the buyer’s property insurance for a year or more.
10. Lower the buyer’s mortgage points by one or two points. This adds significant value to the buyer in terms of dollars saved and will cost you little.
If you think about it, you can probably think of more. I have suggested and used these and other methods to distinguish my clients’ homes in this tough seller’s market. Also, if you spruce up your house with new paint, especially your front door and kitchen, tidy up your yard, deep clean, and prepare your house to put it in its best light, your house will outshine the others in your neighborhood.
One final tip: Hire a competent real estate agent. An agent will make sure you don’t leave money on the table and help you with all the ways your home can be the best buy on the block. I can always justify my commissions because I get the seller of the house more money than he could get on his account. A high-performing professional will make you money and it won’t cost you. Just ask the many ‘for sale by owners’ who ended up hiring an agent after a failed attempt to sell on their own or those who ended up getting much less than the asking price. But if you’re determined to go it alone, the tips above should help.
Until next time,
Bernie Rosellen, real estate auctioneer