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10 Selling incentives to motivate buyers in a down economy

By | Published: Oct 14, 2009 | 23 Comments

Everyone likes a bargain, a sale, or a giveaway. What's not to like? In real estate sales incentives can be a great way to motivate a reluctant buyer to take the plunge and consider making an offer on your home despite the current economic downturn. So as a seller what are some ways you can use sales incentives to drive up interest in your property?

Let's take a look at 10 selling incentives to motivate buyers in a down economy:

  1. Pay the points

    What are points? Points are fees charged by lenders to provide financing. In general one point equals one percent of the mortgage balance. For instance a buyer paying 1 ½ points on a $200,000 loan will pay $3000 in loan fees. As an incentive to write an offer, some sellers offer to pay points on behalf of the buyer.

  2. Buy down the interest rate

    Many buyers are unaware that they can secure a lower interest rate by paying additional points at closing. Just like the points discussed above, a point, when buying down the interest rate, is one percentage point of the sales price. For example, a buyer who is securing a $300,000 mortgage, paying one point in loan fees, and then another two points to buy down her interest rate will pay a total of $9,000 dollars in loan costs at closing! If she can save any portion of this amount by choosing one home over another it might very well sway her decision.

  3. Pay for closing costs

    Closing costs are fees charged by escrow companies and lenders to process the paperwork necessary to close the sale. Sellers generally pay for insuring clear title by purchasing title insurance on behalf of the buyer, but many homeowners also decide to offer to pay for the buyer's closing costs as well. However, in doing so it is wise to put a cap on the amount of closing costs you are willing to pay by stating that you will pay "up to" a certain predetermined amount.

  4. Pay for inspections or compliance work

    Inspections are typically required by lenders before funding a buyer's loan. While in many areas of the country these are typically paid by the buyer, they are almost always negotiable. The same is true of any needed repairs that might be revealed by the inspections. To secure a sale many sellers will offer to pay for inspections and or compliance work "up to" a reasonable amount.

  5. Carry the contract

    Owner financing means that the seller acts as the bank by agreeing to accept payments from the buyer. The advantage to offering owner financing is that buyers will be able to save thousands of dollars in loan fees and can often close the sale very quickly. The downside is that you take on additional risk should the buyer default at some future point. Before offering or accepting a sale with owner financing always seek the advice of legal counsel.

  6. Upgrades

    Many builders now allocate as much as 5% of their sales price to sales incentives that they offer back to buyers in the form of upgrades. Following suit many homeowners have caught on that this technique can be a great way to set their home apart from the competition by offering kitchen and bathroom upgrades, landscaping upgrades, or even carpet upgrades, to motivate buyers to take action.

  7. Allowance

    If your home needs a facelift but you don't have the money to do the work yourself you might consider providing the new buyer with an allowance. An allowance is a credit given to the purchaser to compensate for accepting a home's defects - things like worn out carpets, failing plumbing, or poor drainage.

  8. Free appliances

    Many sellers are now offering to provide buyers with their choice of brand new appliance packages. From front load washers and dryers to new convection ovens, and even plasma televisions, these incentives can be a real plus for buyers who have never owned a home before. They can also be a plus for any buyer who wants new appliances, like just about everyone.

  9. Pre-paid utilities

    Like getting stung by bee once a month, adjusting to a new mortgage payment can be painful. One way sellers swab on the calamine lotion and make it easier for a buyer is to pre-pay utilities over a certain period of time. This could range from pre-paying for gas, electricity, cable TV, or even internet services.

  10. Pre-paid services

    Owning a home isn't easy. You have to clean the darn thing, mow the grass, maintain the heating and air condition systems, clean the pool, clean the gutters, and even change the light bulbs once in a while. Because of this some sellers throw in a pre-paid service like a lawn mowing service, pool cleaning service, or even a housekeeping service, to encourage buyers to step up and write an offer.

Consider your options carefully. Selling incentives can often be just the catalyst your home needs to make the jump from being just an active listing competing with hundreds of other homes for a buyer's attention to a home that sports a pending sale sticker. The key is to choose an incentive that fits your budget and your market. For guidance, explore what other sellers are offering to motivate buyers to take action and consult with a local agent.


By Barbara Q.,  Tue Nov 3 2009, 14:44
Will you look at this!!!!
Price Reductions are NOT a Seller's ONLY option?

The lure of the prize may be the catalyst for the sale! (FORBES.com)

Temporary Buydown Calculator:
By ,  Thu Dec 24 2009, 16:39
These are all great points, buying down the interest rate is very effective. Pricing your home I believe is the most important thing. Consult with your agent. Find out what your home can really sell for and put it on the market perhaps 2-4 percent less.

This will create a buzz about your home and people will be competing for it.
By Mike Linkenauger,  Wed Jan 13 2010, 17:25
Very good advice on here! Most folks are upside down or sruggling to break even. And if all else fails, a good rule of thumb is "price cures EVERYTHING!"

Mike Linkenauger
Short Sale Specialist Network
By The Cascade Team Real Estate,  Sun Mar 21 2010, 06:28
Great article!
By KC Horton,  Sun Oct 10 2010, 16:02
In this real estate world it is a beauty pageant and a price war. If you have the prettiest house on the market and the lowest price, you will sell!
By J Mario Preza,  Thu Oct 28 2010, 12:03
Here's one I saw not long ago... "Buy this house and get a brand new BMW". Of course incentives sweeten the proverbial pie. However, if a house cannot be sold because of the financing, no incentives will change that. I've always heard two things about selling a house in most markets -- location, location, location, and the second, price, price, price, (of course condition applies too, but pricing right, taking into consideration condition, will make any buyer interested in buying). As an example, take a recent sale of a San Francisco house. It started out at $128,000 in the Bayview district (a so-so area), when the dust settled on the numerous offers, $200,000 was the price. Considering that property values had jumped in that area to as much as $540,000 for similar houses, the buyer (and those competing with the buyer) probably figured s/he was getting a heck of a deal, and willingly paid $72,000 more than asking price -- ALL CASH, for that privilege. Oh, and WITHOUT INCENTIVES!.
By Jenna McKinnon,  Tue May 10 2011, 20:15
Very good tips that most sellers are likely unaware of!
By Buy and Sell House Fast,  Mon May 23 2011, 01:30
This is a buyers market where sellers have to work really hard. These are great tips to help the sellers struggling out there.

By Deborah Griffin,  Mon May 30 2011, 08:18
Another option for sellers to consider is prepaying the buyers HOA fees. It could be a lot less than a BMW.
By Kathy,  Tue Jun 21 2011, 10:17
Solid advice!
By Linda Mote,  Mon Aug 1 2011, 11:34
Good Advice!
By Athene D Maynard,  Wed Oct 19 2011, 05:26
Excellent advice! Also having the home "show ready" also doesn't hurt! Pleasant smells and clean rooms say alot to a potential buyer. They can actually picture themselves in the home -- but not if it's in total disarray!
By Shawn Ryan Rosa,  Tue Dec 13 2011, 10:34
seller's concession seems to be the most popular these days.
By Brandon Hacker,  Thu Jan 26 2012, 12:05
If the home is 1999 or older, have the seller pay $100 for a home energy audit. There are great rebates to put towards energy efficient upgrades. What a low cost way to not only make your home more affordable to attract new buyers...but you can get rebates to pay for most of it AND you can show potential buyers that there are true results because you have the audit to prove it. This move will maximize what you get for your money while attracting a fresh pool of buyers. Your Realtor could make a flyer that shows how much they save per month...and go green.

By Team Forss,  Mon May 7 2012, 12:41
Love it or leave it guarantee. On some home listings we offer a 2-year guarantee to sell the home at no cost if the buyer decides to sell it for any reason. Perhaps not a selling concession but it gives the buyer some additional incentives.
By Joel Rivera,  Mon May 14 2012, 07:07
This is a very good article to show clients. In this market with so much competition we need to market homes aggressively and show buyers why our listings are better than the next.

Sellers who are willing to negotiate end up selling their homes sooner.

By Matie,  Tue Jun 26 2012, 05:14
Excellent advice! Also having the home "show ready" also doesn't hurt! Pleasant smells and clean rooms say alot to a potential buyer. They can actually picture themselves in the home -- but not if it's in total disarray!

By Sona Gallatin,  Sat Aug 18 2012, 13:25
Great post! Also remember to include great pictures with your listing...especially the kitchen!
Selling incentives? They don't always work, best to see what the buyers want first before offering. Most people are struggling and selling their homes to get out of a situation, why suggest spending more on an incentive?
By Elizabeth Sagarminaga,  Mon Oct 8 2012, 03:26
Great post..This post provides alot many information about the selling incentives required to motivate the buyers while there's a situation of down economy.

Thank you once again...:)
By opondomusa,  Wed Oct 10 2012, 08:32
Great ways of selling in a down market.Some of these tips captured here but elaborated differently.

By Patti Brownstone,  Sun Jan 20 2013, 11:48
If the seller is moving and doesn't want a lot of their furnishings, they may offer them as a gift to the buyer. Often sellers are downsizing, buyers are 1st time home buyers with little or no furniture. A seller offering to leave a dining room set, can give the buyer that little push they need to buy one home over another.
By Debbie Starnes, Realtor,  Fri Mar 8 2013, 06:43
No incentive will help sell a home if it is not priced right. Price the home right to bring in buyers then offer incentives to help push buyers to write a contract.
By Samantha Freeman,  Tue Apr 22 2014, 09:54
Timeshare resales are a legitimate business, but the difference between a straightforward timeshare resale company and a scam is when the company claims to sell your timeshare at an unrealistic price. Remember, if it’s too good to be true is a scam: http://www.timesharescam.com/blog/126-how-to-sell-a-timeshare/

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