Friday, January 13, 2012

10 Selling incentives to motivate buyers in a down economy

Provided By Trulia

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:

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.

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.

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.

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.

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.


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.


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.

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.

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.

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.

Are you interested in selling your home? Give us a call at 972-772-7000 or email us at

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