Offering Incentives Could Help Your Home Sell Faster
- Apr. 26, 2016
- Courtney Lynch
- Real Estate Tips
Selling your home takes a lot of hard work. Even in a seller's market, homebuyers are hard to reel in. There are many things that can hold a prospective buyer back from agreeing to a purchase. A common one is price, especially in a market with increasing numbers of first-time homebuyers.
The affordability of the home isn't the only cost making buyers hesitant. Beyond that figure is the down payment, closing costs, mortgage insurance and inspector fees, just to name a few. It's understandable some buyers might need a little push before closing on a sale.
Home sellers are in a great position to offer that extra motivation. Not only will the impending sale help them and their goals, but it can also bring the buyer into a fantastic new home. Because of this, offering encouragement has become increasingly more popular. According to Realtor.com, 37 percent of sellers offered incentives to help sell their home faster last year.1
What Buyers Want
Offering incentives can help make the sale go faster, and might convince the buyer to accept your asking price, or one close to it. However, it's all about offering the right incentive. Nolo explained offering vacations, televisions or cars might attract little attention from people who are focused on spending their money on a house, not cruises.
"If they're going to pay for those things, why don't they just lower the list price?" Asked real estate broker George Devine. "Especially because a higher selling price can result in a higher documentary transfer tax and real estate commission."
Instead, offering incentives related to closing costs will likely turn some heads. According to a survey from Redfin, first-time homebuyers are faced with many obstacles, the majority being related to money, Wolf Street reported.3 Real estate agents responded with what they thought first-time homebuyers' biggest obstacle is:
- Almost half said it is the ability to find a home they could afford
- 14 percent said this population has unrealistic expectations about how far their money could go
- 5 percent said it is saving for a down payment
- 3 percent said balancing student loans with buying a home
- 2 percent said getting approved for a mortgage
With this in mind, sellers who offer to help out with the closing costs have a good chance of completing a sale quickly.
"If you're a seller and you're able to offer some money toward closing costs, you're actually making it easier on that buyer, and they might be more willing to give you the full asking price," said Jonathan Smoke, Realtor.com's chief economist.
What to Offer
Nolo explained there are many fees associated with closing costs. Offering to pay or help pay any of these would catch the attention of a buyer.
Contributing to the first mortgage payment can help ease the financial burden of moving and buying a new home. Or, sellers can pitch in for a moving company. This isn't part of the closing costs buyers dread, but moving is often a difficult process anyone wouldn't mind having help with.
If the homebuyer is having some financial troubles to begin with, he or she may not have been able to put down the full 20 percent for the down payment. If this is the case, the mortgage lender probably required the purchase of private mortgage insurance. The buyer then has to pay for the first year of PMI, which could be several hundred dollars. Pay for this, or at least part of it, and the buyer undoubtedly will be very grateful.
It's not always about the money, either. While offering arbitrary things isn't helpful to homebuyers, some extras that go with the home could convince someone to make the purchase. For instance, if you have some furniture that matches the structure of the home to a too, or an appliance that fits perfectly in a particular room, ask if they'd like the item thrown into the deal. If they show an interest in your exercise equipment or some landscaping features in the backyard, and you don't mind parting ways with it, see if including these items will help the buyer come around.
With increased home buying interest, low rates and high home prices, sellers have the advantage in many of the country's housing markets. However, buyers will be attracted to the seller that is willing to help them find a great new home. Offering incentives can be the trick to getting your home sold fast.