I get this question from sellers all the time. “What makes people buy homes?” There are a lot of options for purchase incentives and they can get a little confusing. I’ll outline a few of them here and talk about consequences.
The number one incentive is seller paid closing costs. You can offer them either as a percentage of sale price or a dollar amount. I dislike offering them up front. In my opinion if a buyer needs them then they will ask for them when they make an offer. I haven’t had much luck getting buyers by offering closing costs, but other agents may say differently.
Another common incentive is a home warranty. I do recommend this one to all my sellers. The warranty does not relieve you of legal responsibility if there is an undisclosed issue. However if the issue is something like a water heater or an appliance then the warranty will replace it. This often prevents any further action. They generally cost between $300-$500 depending on which company and which warranty you go with.
A third option is paying a higher buyer agent commission. I am on the fence about this. As much as I like receiving a higher commission when I represent a buyer, it seems a little unethical to feed an agent model where the highest paying properties get the most attention. On the other hand, I have to present every option to my seller, so I do mention this. The thinking is that your property will get more attention and more showings because it pays more. I don’t have any hard data on whether or not this works, but in my experience the few properties I have done this with received a great deal more attention.
You can also offer any number of redecorating incentives, paying neighborhood association initiation fees or things of that nature. All of those options are considered seller paid closing costs but when marketed differently they sometimes attract buyers. The redecorating fee is especially useful if you have old carpet or linoleum and folks have commented on it. However, I rarely offer those upfront. I tend to wait until we have had some viewings and gotten some feedback before adding something like that in.
Some smaller and more fun incentives I’ve seen are Starbucks cards, American Express gift cards, unique and attractive furniture, work benches in the garage and a host of different pieces of furniture. If you really want to get creative about selling your house then you can do anything like that. I will caution you, however, that these things are percs. If buyers don’t like the house then no amount of inducement will get them to buy it.
The number one thing that makes people buy homes? Price. If you price your home accurately it will sell. This is the one common fact that is true in every market. If homes like yours are selling for $100,000 and yours is on the market for $120,000 then nobody will buy it. What’s worse is that nobody will even look at it! Our MLS listings can be sorted by price, so if you’re too high you will be outclassed by the other homes in that price range.
Posted on February 7, 2011 at 8:01 am by Ray Nelson