As always, I enjoy reading your blog. Great job!

Check out my blog from this past January for more incentives.

Great advise Tara!! Try offering (if your state permits) a bonus to the buyers AGENT- Not broker ie office. That way the entire bonus is paid directly to the buyers agent who is the one whose attention you are trying to get!!!

I agree about pricing it right from the get go, however, in certain markets and price ranges, some incentives do work. For the most part, the incentives that offered a snazzy car were usually dog properties that the incentive wouldn't help. At the end, it is still the value a buyer places on the home in a given market.

It's all about price!

Price, Condition, Location.....always has and always will be the answer !!!

Re. broker incentive, for me there is an ethical query about agents who show homes based primarily on their compensation, rather than what might be the best home for their clients. While it is true that many will disclose this bonus and even pass it on to their buyers, personally I've never favored the buyer agent incentive. Why not structure an incentive with the listing agent, with a bonus based on time, negotiated price or something that rewards performance?

Hi - I'm not a huge fan of adding Broker bonuses because the buyers often get mad and think the Realtor is making too much money. They also may believe the agent pushed them to buy a certain house because of an incentive. In NJ, with buyer agency, I think it is best to disclose to the buyer that there is a bonus. I'm betting most buyers will ask for part of it, as that has become very prevalent in our area. A better choice might be for a seller to pre pay the property taxes for a period. One of my listings has over $60k in taxes and if the seller pays $25k in taxes, it saves that buyer a lot more money than a $25,000 price reduction off the price.

Price, condition, location...always was and always will be the answer !

I think we would all be surprised what incentives sell. I have seen people that make well over 6 figures scramble for a free t-shirt. Sometimes offering lower priced items like TVs, Washer and Dryer or an iPad may make the difference in writing an offer and taking a walk to the next place

Thanks for talking about the buy down incentive option. For years we share with our clients that price is important when you are paying with CASH. If you are financing your home...your interest rate could be just as imporant and sometimes more important. Your interet rate determines not only your mortgage payment but also your total cost of the mortgage over the next 5,15 or 30 yrs. A proper structured buy down option will not only help the seller to sell without a price reduction but will also help the buyers to buy a larger home without paying more.

Thank you Tara:

I think that the ineterst rate buydown, closing cost credits, and prepaid HOA fees are excellent recommendations. I would say that this is particularly true since most of the buyers that I see are very short of cash and these can help the buyer a great deal.

With respect to the agent bonus, I am personally offended by them because I think that the listing agent is trying to influence me to act against the interests of my client.

I tend to avoid properties wher the listing agent is offering a bonus to the agent who is representing the buyer's interests because I think that not only creates a conflict of interest for the agent representing the buyer's interest, but I also consider selling agent bonuses to be an insult to my integrity.

@Scott White, a buyer doesn't care if you are upside down. If your house is priced higher than comparable properties, they won't buy it without a good reason.
What a seller needs, wants, or thinks they deserve to get out of a property isn't relevant to its actual market worth.

It's always good to think outside the box when attracting buyers to your listing and finding lots of competition. I feel a little funny about the agent bonus option but FannieMae and FreddieMac do it frequently.

Great post, Tara!

TG

Realtors...the only legal MAFIA outfit in the country. 6% of the value of my house for the privlege of selling it? What does a Realtor do to merit a windfall like that from the seller? Most realtors will promise you the moon to get your listing and then they have nothing but excuses when it doesn't sell (of course they will encourage you to keep dropping the price and offering incentives). With the internet and all the DIY info available on TV there is NOTHING a realtor can do that you can't do yourself. Of course should you DARE to sell your house yourself realtors will refuse to show it (even if you offer a buy's agent commission they are loathe to sell it beacuse you are breaking their union). The system needs to change to where the BUYER pays a commission to his or her agent rather than the seller. If you're working for the buy why should I, as the seller, pay your salary? After all you devoted time to your buyer not to me. Most listing realtors don't care for their listings. If the seller moves away the lawn goes uncut and the listing agent rarely, if ever, checks up on the house after it has been shown to ensure nothing untoward has happened. I looked at a house once where water was pouring from all the ceilings...apparently someone who looked at the house previously turned on water in a sink and forgot to turn it off and the sink overflowed. The interior was destroyed....all because the listing agent didn't check on it. A friend had burst pipes in his house because an agent showing the house turned the heat off before leaving and his insurance company refused to pay.

The way I look at these incentives is that they just come off the price of the house. If they didn't offer the incentive, then the house would just be cheaper. Maybe some fall for it though.

All great ideas... but I think the most important part is pricing. A correctly priced home will always prevail in any market. I'm sorry Dylank had a bad experience with his / her REALTOR. References are always important when you are choosing a REALTOR.

Click to search for homes under $1,000,000 in Asheville NCsearch for homes Asheville NC

Price, condition, location...always was and always will be the answer !

Buyer Agent Bonus are one of the worst marketing tools out there. That being said, I hope my competition continues to use them in their presentations to sellers. Makes me look like I have their best interest at heart when I explain why that is a horrible idea. Worked great prior to the internet.

I am a consumer and for all you agents out there, incentives work!

I SO disagree with DYLANK. I have been a Realtor for 33 years and I have NEVER not taken care of my lisitings.
I have even gone so far as to go and clean a home when sellers were gone. I decorated a house one year, Christmas, while the sellers were gone through the winter. Obviously he is painting Realtors with one big ugly brush and I'm sorry for him that he had such bad experiences. I have never taken a bonus for listing or selling. I give that to the buyers towards new appliances, furniture or whatever they may need. Price is king for selling in this market!

You can offer all the incentives you want. You can have the right location, price and look. If the buyer
can't qualify at the bank because, earnings to debt ratio or has bad credit from day one. You're back to square one. Most people I believe in the USA. don't have a pot to piss in. They have over extended themselves in the
credit department and now is the time to pay up, but, they can't. You real estate agents know it. As a home seller I see it.

R.A., Santa Fe, NM.

Mr. Dylank should trying being a hard working, ethical Realtor for 30 days. I do think he would change his unbelievable thoughts. It's all about doing the right thing and giving 110%....that might just cause someone not to have as harsh of an opinion. D. Hill, Cookeville, Tennessee

I agree with Helen. I'm not a seller but I am on the market and these incentives would definitely lure us in an area where prices are similar. Of course I also agree with Bob on pricing the home right in the first instance. However I think the article was to cover a situation where the homes were priced similar and therefore you had to differentiate your home among the others in the pool. You don't want to go too low with pricing and no incentives and potential buyers start to question what's wrong with the home. These days it's all about perception.

Dear Dylank,

THANK YOU, for your absolute straight forward and nothing but the truth statement.
As an investor and pro renovator it has been my unfortunate pleasure to be in the company of the sea of
serpents and the huge price one pays to be a " For Sale By Owner" like a leper outcast.
The good news it will not take much longer for the home owner to realize there are other options such as flat rate realtors that charge a minimum fee to place your property on the internet ( everyone knows the listing agent rarely brings the buyer) orTaking a real estate course yourself and learning the minimal info needed to sell your home !!

I am a consumer and just listed my house on the market 6 weeks ago. I have a unique situation. I have a duplex with guaranteed income. It's not your normal rental property. It looks more like a home. I have advertised it as income property/mother in law suite. My realtor gave me some value ranges on homes around, basing it on a single family home. There are no comps around like this at all. I feel this is to our advantage. We did price the house a little higher than what the realtor gave us. I figured we could start a little bit higher so we have room to come down. With all of the fees and commissions that will be paid. I have curb appeal, the location is a little iffy and it is in good condition. I figure the buyer will want to come in and do their own thing as far as the cosmetics. The house has been shown twice so far. My realtor tells me it looks great. I'm just a particular type person when it comes to things being neat and clean. Any comments or suggestions are welcome. Thanks!

To Dylank, I have to respond to your comment because you seem so upset and passionate and it touched me. I'm relatively new to the Real Estate business but I'm not new to the Real Estate merket, so, I've seen and felt what you are talking about. ... I am so sorry that you and some people you know have had the bad expeiences that you had, but please dont judge all of us. There's always going to be some rotten apples out there and in today's world, where money and "things" tend to be what rules many people, you're going to get alot of people who do only care about getting the listing. ... I've seen. Before I was an agent I wold drive around and see the homes like you described, and I would see the same names on the signs over and over. I woul call and call to see some of them and never get a response. Can you imagine the owner trying to sell that house and me trying to buy. Both of us frustrated. So, What I did was after I found a Good Dedicated loyal Agent who not only went out of her way to show me over 60 houses and submit at least 5 offers until we got one thru, was go to Real Estate School and get my license and become a Realtor. I figured I could make a change by being a different type of agent. I would answer my phone, return my calls, keep my lawns cut, clean the insides of the properties, keep the pools clean, ... anything necssary to keep my customer happy and get their home sold as fast as possible. (Considering they allowed me to list at a reasonable market price)

And at the time that I was shopping, I was shopping in the $50 - 70k price range; when I went north to sell my house, she took my disabled mom out to the market and checked on her regularly. .. She did this for not 6% but 1/2 of 3% minus her fees, which wasn't much for her costs for gas and time. Most agents arent working for what the commission shows or in the listing. Most agents actually make alot less than you think. And when you count the fact that they pay for all of their expenses like gas, advertising ads in the papers and signage, lockboxes, office fees, copies, faxing, phone calls. ... Yes you had some bad experiences, but believe me there are so many of us out there who will more than earn that 1/2 of 1/2 of the posted commission less costs. and do it with a smile. I've seen some agents go and cut lawns themselves, clean pools, but then on the other hand I've seen the other kind like you described. ... Again, I'm sorry.

All I'm saying is this, ... I'm sorry, on behalf of us Good agents out there who care and do our jobs and take care of our clutomers as we would want to be taken care of; And I hope that one day your faith gets renewed because there are many of us world wide who would be glad to take care of you or anyone else with a smile.

And, there are even agents who will post customers private home sale ads on their websites as a private sale ad at no cost to that person, just as a nice thing to do so that person could get exposure for their FSBO.

As for incentives.... Keep the price reasonable and in line with the other similar homes in the same or close areas and please leave the appliances in. Many buyers will go into the least expensive home and not see a refrigerator and say, ... "what... no refrigerator? ", and turn around and want to look at a homefor $5000. more just for a $500. used refrigerator. So, It's not alot to ask, ... sometimes leaving your old appliances helps alot.

As usual...great tips for sellers. Thank you for sharing :-)

Owner financing. Throw in a boat. Leave that pool table and other things of interest that are unique to the house. The house must be clean and uncluttered, especially if occupied.

I agree with many posters above. Price the home right in the beginning, go ahead and plan on paying some of the buyer's closing costs (they will more than likely ask) and consider a home warranty for any home older than 5 years. I am totally against offering incentives to an agent/REALTOR®. That is what the commission is for. I realize there are markets where being creative is a must, such as California and those million dollar shacks, I mean homes but most markets need only a nice home that is priced right.

It is all about Seller's incentives and of course, PRICE!!!

Great Blog Tara! Some of my peers need to relax and think about what " incentives " are!

None are always applicable but the idea of what would get a deal " off stuck "

isn't just price! Giving back points is actual up-front cash to buyers in markets

where points are routine a price reduction might not feel like much in a payment.

If a reader doesn't like any of the ideas Tara has , maybe reserving some amontt

for buyer specific " deal makers" to meet " on the fence " objections! could

help. Appliances if they don't like what's there, credit towards a paint job,the list

is endless! Attempts to meet the needs of the prospective buyers produces

actual buyers Can anybody argue that?

Great topic. I believe the Buyers agent incentives do work but the best incentive is the right price. I don't just pull homes that are a higher commission though. It does how ever make me remember that listing for any other clients that fit that search criteria.

This is great advice. Sometimes I just need someone to remind me of all of the creative ways to buy and sell. Also, if the buyer cannot come up with the total down payment there is always a Purchase Money Mortgage that is legal in Florida. FYI, I just sold a house that had been on the market FSBO for 1 year. I offered free staging with the listing of 6 months or more. I staged the house, with no money out of pocket, which the seller only spent $150 and it sold the second week. The staging made it a totally different place. Pretty always helps the sell.

Thanks Tara... more great information!! I have used all these ideas many times. Interesting how these incentives often work better than a price reduction.

PRICE + Paying Buyers Closing Costs !
It all boils down to that, in my opinion.
Marcia Montgomery
Keller Williams

Great advice as always. Unfortunately, not all Sellers can afford any incentives. But, for those Sellers who can, I think the Broker incentive will bring more Buyers through the home.

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As an agent above said, a Broker incentive sounds like "steering" to me and I would avoid that at all costs. As an agent, you are supposed to tell the buyer about ALL homes that meet their criteria, not just the ones that are paying the co-op Broker more commission! Be Careful!

Unfortunately some FSBO's may have had bad experiences with agents and there are agents that probably have as many horror stories regarding homeowners. The BUYER, not the agent chooses the property that suits their needs, desired location and their pocket, not what is being offered for a commission, Actually, the BUYER does pay the commission because it's included in the sales price, the seller then gets the advantage of using it for tax purposes. Whether it is a listed property or a FSBO, a buyers agent or a transaction agent, Realtors are governed by Real Estate law, Professional Standards and a Code of Ethics. Agents bear a liabilty in every step of a transaction starting from the first contact to the closing table. Only then does an agent receive compensation for his/her work regardless the amount of time and effort spent. The commission( is negotiable between all parties) is compensation for that labor and expenses incurred including hours spent in researching the market, available financing, continuing education,advertising and insurance, etc. We survive soley on our professional reputations to stay in business. A blanket statement regarding all agents and commissions is really unfair. Judy Kicklighter

Great info. Love the picture.
Rick

Great Blog Tara!

I looked at the Mortgage video which was very interesting but why on earth did he pick a $500,000 dollar home as an example, sometimes authors of articles are out to lunch.
Are people who are looking at that kind of home in this market really be short of assets how would they ever get a $400,000 mortgage?
Buyers also have to have some sophistication to follow the pay more too pay less rule,
Since I just sold my home recently and intend to buy sometime next year I read these articles to pick up hints from a buyers point of view ,now as a cash buyer to me my only real object is price , if I'm wrong please tell me why .

Judy Kicklighter has an excellent response, shedding some light (hopefully) for the FSBOs. I would like to also make the distinction that no one seems to be making to the non-licensed group participating in this post: there are real estate licensees and there are real estate licensees who are also REALTORS. They are NOT necessarily the same. A REALTOR is a member of the National Association of REALTORS and subscribes to the Code of Ethics. Please be sure you are not lumping everyone with a license into the same group, as a REALTOR is held to higher standards. That is not to say that some REALTORS may have lost their way, and may not be representative of all REALTORS, and may in fact not be practicing up to the high standards we expect. But I believe that the majority of us do the very best we can to protect our customers and clients, whether they be sellers or buyers. With regard to the topic of incentives, I love incentives for the buyers, but not for selling agents. In my area of the Central Coast in California, we have weekly broker caravan, and I'm fine with listing agents offering incentives to draw agents to their listings (lunch, gas cards, whatever) --- just don't agree with offering a bonus to selling agents, although as one agent pointed out, Fannie Mae and Freddie Mac do it all the time! One agent said the bonus should be only to the agent, not the agent's office --- excuse me? The bonus MUST be paid to the agent's broker first! An agent is not allowed to received pay separately. The broker has the discretion to pay the agent 100% of the bonus or take the normal split, but it's the broker's decision. Mostly, I agree with the concept of pricing = value, although paying buyer's costs is a great incentive and REO sales have buyers thinking it is "normal" now.

This is right on the money! Thanks

Great Tips. Thanks Tara.

All the best,
Larry Lichtman
REALTOR, Property Manager
Your Real estate Resource For Life
Cell (267) 254-7994
LarrySellsRealEstate@gmail.com

Not sure about the last point. While I like the selling agent bonus (more money), it doesn't affect what my buyer clients buy or how I counsel them. In fact, I'm more likely to stay away from the bonus property if all things are equal to avoid the notion of impropriety.

I don't know how it works in Dolores' area, but here in IL the agent represents the broker, and all money, gifts, etc go to the broker, to be split according to office policy. If the broker chooses to let the agent keep most or all of the incentive, that's fine. But don't expect the extra money to be all agent. We kind of joke that even the Starbucks card given out at a Brokers Open Houses could be claimed by the brokers of the agents winning them. Doesn't happen, but it could!

Thanks for the great post !

Current information suggests that untold numbers of species remain to be discovered. Is this to say that all environmentally sensitive projects should be halted to protect these unknown denizens? You may be referring to the Tellico Dam/Snail Darter problem eventually settled by relocating (successfully) the fish. The Endangered Species Act was written to protect such glories of nature as the wolf, the eagle and other treasures. It was not meant to be a tool of extremists with wholly different motives who choose to apply this act for meanly obstructive means. Put your glasses on.

If you can afford to offer a bonus you can afford to drop the price by the same amount. Sellers that price right sell faster.

Receiving incentives are always are good thing.

Excellent tips Tara!

We have great location, great price, right agent, and no sale. We bought before the bubble and now we are trying to sell after it. Offering incentives can be a hard pill to swallow. I guess what you do is based on how much you really want to sell your house.

I agree - it's all about price!! With the right price, you don't need to turn to incentives!

I agree with a lot of you posters about price & condition is what sells the home the fastest. I write about it on my blog.

I also agree that if a buyer see's that the seller is offering to pay closing costs, that will draw them in as well. But keep in mind that some lenders will only allow seller to contribute up to 3%. (I know a lot of you already know that)

Selling the home with a warranty helps, too!

Incentives can work, but so far the best incentive I have seen is a home priced correctly.

Like the idea of an interest rate buy down...show the numbers to your buyer and they will be able to afford a more expensive home with the interest rate buy down , as opposed to sticking with homes in their supposed price range, paying the full interest rate.

I just started using a larger commission rate for buyers agents. The thought is to signal that the sellers are ready to sell and any agent that doesn't see it that way is missing the boat. You have an obligation to your buyer to make sure they don't miss out on an opportunity. I have a listing where there are 290 houses w/4 bedrooms within 4 mile radius, it's my job to make it stand out. You agents that are offended just might take a look at it from a different stand point and stop thinking of only yourself, you can give it back to your buyer toward their closing cost and come out a hero. Just a thought

For 6 years I've been looking to buy a home.the prices are ridiculously high. Even the trash homes are over priced. Now my decision to purchase a 3-4/5000sq ft. home for well under 500k is extremely appealing. compared to under 2000sq ft home with 7000-10000 property tax. is another incentive to buy out of state.N.Y and esp.LI are for the filthy rich and the unscrupulous. I have 5 years to retire and paying for house in cash, for many reasons. #1 NO MORTGAGE COMP. NO BIG OVER HEAD. "TEXAS IS MY FUTURE"

Great post, Tara. In addition to the seller helping with closing costs, particularly for first time home buyers, the seller can also offer to pay the difference between 3.5 and 5.0% down on a FHA loan in the form of a seller credit. This will eliminate one of the two FHA mortgage insurance premiums and reduce the buyer's monthly payment.