“ 2 in 5 home sellers are offering concessions to homebuyers,” according to data from Redfin buyers’ agents. It appears that gone are the days when buyers felt the need to waive the home inspection and other contingencies just to win the home in a bidding war.
“… 42% of homes sold in recent months offered buyer incentives,” according to the another Redfin report.
Some cities find more buyer incentives than others. Seattle, Las Vegas, Denver, San Diego and Phoenix lead the way when it comes to sellers being willing to give something up to get their homes sold.
Since the chances are good that you may run into a situation where you’ll need to counsel a client about offering concessions, let’s take a look at some of the most popular.
- mortgage rate buy-downs
- cash for repairs
- cash for closings costs
- warranties on household appliances.
Offer to pay points
As we all know, one of the biggest disadvantages in the current real estate market is rising mortgage interest rates.
If you represent sellers that just can’t seem to get the home sold within their deadline, counsel them about what is likely the most effective buyer incentive, paying the buyers’ points.
Check this out: “… lowering the buyer’s interest rate can make their monthly payment a lot more affordable,” according to Christy Bieber at Motley Fool.
If they are weighing just lowering their asking price for the buyer, explain to them that buying down the buyer’s mortgage rate is the better deal. Especially for the seller.
Bieber explains that “… if you had a $300,000 house on the market, dropping your home to $280,000 would have about the same impact as buying down the buyer’s rate by 0.75%.”
“But reducing the buyer’s rate that much would only cost you $9,000, so you’d end up about $11,000 ahead.”
This tactic should be reserved for only those clients who need to sell and are having a hard time doing so. Keep it in your back pocket and pull it out if you suspect that it’s mortgage rates standing in the way (if your listing is a starter home, for instance).
Other popular incentives to speak with your client about include:
- Pay a portion of the closing costs
- Include personal property if the buyer has expressed an interest
- Offer to pay for the first year or so of HOA dues
- Warranties are always appreciated
- Designate a specific amount of money toward repairs “Seller will pay $500 at closing for repairs.”
Offering incentives to the buyer may be a hard pill to swallow for the seller. Approach the topic at the beginning of the selling conversation so that they aren’t caught by surprise and counsel them on the benefits of offering buyer incentives.
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