Sellers: How and When to Use Homebuyer Incentives
To successfully sell a home, sometimes you’ve got to pull a few tricks out of your hat. One way that many sellers are trying to sweeten the deal for buyers and speed the process along is to offer buyer incentives.
There are a variety of ways to make a listing and the overall deal more attractive to buyers, but sellers should use incentives appropriately. Not every type of incentive will necessarily work with every deal. You want to make sure that you’re not wasting your time and money. For that reason, it’s important to determine what type of incentive would work for the types of buyers that are looking in your area to make sure it works in your favor.
If you’re not getting the offers you expected despite your best efforts to stage your home and price it right, throwing in an incentive can be the link that makes the deal happen. Just make sure to keep these pointers in mind when offering homebuyer incentives so they work exactly the way you need them to work.
Make Sure What You’re Offering is Legal
There are plenty of perfectly legitimate offers that you can entice buyers with: covering closing costs, buying down interest points, throwing in the furniture, and so on. But there are others that border on illegal.
Your real estate agent and lawyer will be able to help you determine what may be considered against the law. Take their advice before you choose what type of incentive to offer, and whether or not to use an incentive at all.
Use Incentives to Make Your Home Stand Out From Other Listings in Your Area
Unless it’s a super slow market in your area, you’ll likely be competing with other listings. Part of an effective marketing strategy is to make your home stand out from the rest. If you’ve done everything else to make that happen – such as having the home professionally staged inside and out – you might have to take an extra step to make buyers look in your direction.
Use Incentives to Compensate For Any Pitfalls in Your Home
It’s never OK to deliberately hide or conceal flaws in your home to buyers. That’s not only dishonest, it could also land you in legal hot water after the deal has been sealed. Sellers are encouraged to disclose any major flaws in the home before buyers put in an offer and agree to purchase at a certain price.
Flaws in a home can range in degree. They could be as minor as a cracked tile or peeling paint on the window sill. They could also be more expensive to rectify, such as an old roof or a furnace on its last legs. Whatever the case may be, you should be upfront about these flaws, and consider compensating for them through an incentive. That’ll help ease the sting of having to deal with such issues after the buyers move in.
Don’t Come Across as Desperate
The last thing you want to do is seem overly eager and motivated to sell. In some cases, offering an incentive might make you come across as desperate to get your home off your hands as quickly as possible. Buyers will pick up on that, and will act accordingly.
Maybe they’ll think that there’s something wrong with your home, and may avoid putting in an offer at all. Or perhaps they’ll think they’ve got the upper hand in the transaction, and will throw in a low-ball offer. Sometimes the offer of an incentive can backfire on you, so make sure you use caution before you decide to use them.
Don’t Offer an Incentive Coupled With a Price That’s Too High
Every seller wants to get the most money upon the sale of their home, but that doesn’t mean it’s OK to overprice the property. Not only is this greedy, it’s also unethical. It’s always a good sales tactic to price your home according to what the current market dictates. That way, you’ll be able to sell quickly and for as close to what your home is worth as possible.
If you’ve overpriced a home, don’t offer an incentive to offset the inflated price that you’ve listed your home at. Buyers these days are well-informed before they begin their house hunt, and with the advice of their real estate agents, they’ll know right away if a home is priced well over what it should be. By throwing an incentive into the mix, savvy buyers may quite simply be insulted, and gloss over your home altogether.
In addition to this being shady practice, it can also be dangerous for the overall market. Buyers who receive cash offers to pay for an overpriced home would then use that extra cash to get approved for a larger mortgage that they would otherwise not be able to obtain. Some experts have gone so far as to claim that such tactics like these were partly responsible for the housing crash.
Regardless of whether that’s true or not, it’s sound practice to list according to true market value.
The Bottom Line
Incentives can work wonders at selling a home. In fact, they often can mean the difference between a sale and a stale listing. However, careful consideration needs to be made before you arbitrarily choose what to offer buyers. Along with all other aspects of selling a home, the decision to use a homebuyer’s incentive should be made with caution.
