INCENTIVES THAT SELL

INCENTIVES THAT SELL
How To Attract Home Buyers WithoutGiving Away The Farm

If you've been reading the headlines, you already know that the housing boom has been declared "over" for many markets around the country. The pool of homes for sale has grown in many places--three and four times more than last year in some markets--while the pace of sales has slowed and price increases have modulated nationwide.

Whether due to interest rate increases, high home prices, jittery investors, wait-and-see consumers, or all of the above and more, today's market requires sellers and their agents to adjust expectations and to market homes more creatively.
Back To Basics Of Price And Condition

Of course, the fundamentals will always hold true, no matter how a real estate market is behaving. To sell a home quickly, at the best possible price, owners must ensure the list price is in line with today's market (not yesterday's), that the home is in good, preferably move-in condition and that it has enough curb appeal to attract buyers inside.Among these, price is still the critical variable.

Sellers may benefit by getting a pre-listing appraisal to ensure their asking price is attractive. (Find out more on page 4.) They may even want to price their home a little below appraisal and, of course, advertise that fact to buyers.

Pricing a home below the competition--say, 5% below the last comparable sale-- may be advisable.You can tell your price is too high if you've had no showings at all or if you've had, say, 10 showings but no offers or if the competition has dropped their price below yours. Also, keep an eye on comparable properties whose listings have expired; they tell you what price is too high in today's market.

Beyond Basics

Still, the fundamentals may not be enough to get the job done for many sellers in today's market who want to meet their moving timetable without "giving away the farm." Offering incentives to buyers could be the key to attracting a purchase offer at a reasonable price.Take a cue from builders and condo developers who have been offering incentives including:

Drawings for a free home (increases traffic to builder's model vs. competitors' properties).
No-money-down financing.
Buyout programs for sellers with a home to sell.
Guaranteed pricing (if prices go down before settlement, the buyer gets the lower price).
Six months to a year of mortgage payments.
Free upgrades (better carpeting, flooring, fixtures, custom paint colors, etc.).
Discounts for buying during a "12-hour sale" period.
Free vacation lodging and/or round-trip plane tickets.

Customize Your Strategy

Although many of the types of incentives offered by builders and developers may not be feasible--nor advisable--for individual sellers to offer, you can take their cue. For example, you could:

Offer to take back a second mortgage for qualified buyers who can't quite finance the purchase price.
Pay the buyer's closing costs, reducing the amount of cash they need to pull off the deal.
Add conveyances to the sale, such as a lawn mower, yard tools, drapes, playset, etc.
Pay for a year's membership to the neighborhood recreation center or gym; or pay a year's worth of homeowner association dues.
Paint the interior or exterior of the home in the buyers' choice of colors, so it's exactly as they want it at move-in time.
Include a home warranty or redecorating allowance.
Guarantee payment of a year's worth of utilities, lawn service or pool cleanings.

The list of possibilities can go on and on. The important point is to tailor your incentive to what the most likely type of buyers--families, singles, retired couples, etc.--will most likely appreciate. And ideally, of course, the incentive should have minimum impact on your bottom line.

We hope you'll call us if you're getting ready to put your home on the market. We'll be happy to work with you to make sure your home gets the attention it deserves and sells quickly at a price you can be happy with. If you're looking to buy a home, or replace your current residence, you could be in for a treat—or maybe an all-expenses-paid vacation!

Drawing Traffic To Your Door

When there's a glut of homes on the market, and not enough buyers to go around, getting buyers to even look at a home can be challenging. That's where "traffic incentives" pay off--enticing potential buyers and their agents to choose your home over others for a look-see.
Here are some offers other sellers have used effectively to generate showings.

Drawings (where legal) for, say, a free weekend at a five-star hotel or a week-long vacation at an exotic place (if you own a time-share, give your week away!). Be sure to select a prize with wide-ranging appeal.

Bonus or higher commission for the agent who brings in your buyer.
Broker open house with caterer and gifts.
Discount coupons, gift certificates or free tickets to area sporting events, restaurants, concerts, movie theaters, stores, etc.
Let your imagination go wild, but limit your offers to agents and to serious buyers who are qualified to purchase your home.