To differentiate one product from another, you need an edge. (I know, Derek Jeter has an edge.) You see it in car dealerships whether it is a “no money down” lease or lower interest rates, you find it in foods stores when you receive a free drink with the purchase of a sub, retail stores with their BOGO’s and even mortgage companies that promote 0 bank fees.
It can be the same for a house sale. As the inventory of homes continue to grow, and the buyer pool either remains stagnate if not lessening, there must be something other than the price of the home, its location, or its condition to attract the limited number of buyers. That something is an incentive to buy one house over another. Selling a home is no different than selling any other product.
The following are some ideas that have worked for my clients for years in selling their homes faster and for more money:
Closing Costs. Saving money for a down-payment on a home is difficult enough, especially for first-time homebuyers, then adding on another 2-3% of their purchase price towards closing costs may make it cost prohibitive. As a home seller, you can offer to pay for a portion or the entire amount of closing costs of the buyer. It allows the buyer to use that extra money for the down-payment, which may just give them the flexibility to offer a little more for the home of their dreams. In actuality, no money is exchange. The proceeds to the seller is diverted towards those costs and the buyer is financing that amount. This would raise their mortgage payment by just small amount but alleviates the up-front costs. (Note: Any give-back to buyers cannot exceed 6% on a 80%LTV loan & 3% for any loan above the 80%LTV)
Real Estate Taxes. Since we all live it, New Jersey has the highest (or nearly the highest) real estate taxes in the country. The difference in many contiguous communities vary greatly, resulting in similar home’s selling faster in one town over another. If that is the case, a seller may consider paying a portion or all of the first year’s real estate taxes on behalf of the buyer. This could be in the form of a reduction in the selling price, a credit at closing, paying the town directly, or paying the three to five month tax escrow collected by the lender.
Mansion Tax. New Jersey keeping to their tax state name, adds a fee of 1% of the purchase price to be charged to buyers who purchase a home for one million dollars ($1,000,000) and above. By having the seller fully pay or a portion thereof, via the proceeds of the sale, will give the that particular home a better look at than one that is not offering it.
Home Warranty. Offered by most real estate companies, a Home Warranty is an insurance policy that covers many of the homes inter-workings such as: plumbing; HVAC; electrical; water heaters; appliances; etc. With just a small deductible, these items will be repaired or replaced by a licensed contractor and are covered from the day it is applied for and for a year after the buyer closes. The cost to the seller is between $450-650 based on the coverage, but only paid from the proceeds from closing. This incentive gives the buyer a comfort level in their purchase and has proven to sell homes for more money and in a shorter time period, and again with really very little cost to the seller. And it covers the seller until they close.
Maintenance Fees. Whether a co-op, condo, townhouse, PUD, lake community, private community, etc., there are fees involved in the form of maintenance fees, lake fees, or the like – adding yet another monthly expense to the buyer. By offering to pay a full year or a portion of it you will attract buyers over your competition. That can be done by sending the Association for said amount.
Renovations. If you are willing to and a buyer is willing to wait, renovate or partially renovate rooms that they would like done or give the buyer a closing credit for the same.
But wait, there’s more! Be inventive with your incentive by determining what buyers are finding detrimental to your home. You Realtor should know as well as prospects that walked through your home and has willingly given constructive feedback. But whatever the incentive, be sure to advertise wherever possible, so that the buyer will see it.
Incentives that do not work. Adding a Realtor bonus may incentify an agent but it does nothing for a buyer and cannot be advertised as such. Remember you are attracting buyers.
The best incentive to give a buyer. It always comes down to price. Price it right and the incentives are not necessary but they do help.
Looking for more incentive ideas or any other real estate questions please contact me anytime at 201.317.7527.