As the real estate market cools, sellers are finding it increasingly necessary to pile on extra incentives for buyers in order to close a deal. Today’s cost-conscious buyers are not only looking for a great price, they are also looking for added value benefits that the seller can bring to the table aside from a drop in their asking price.
For Realtors, this means it is becoming more and more important to find the perfect “deal” rather than the perfect home and will require you to “think outside of the box” a bit to come up with enticing buyer incentives that will leverage the price of a home. With that in mind, there are several ways to sweeten a deal for buyers without necessarily dropping the asking price for your sellers. Subsequently, if a seller won’t budge on their asking price, keep these ideas in your back pocket when thinking of alternative incentives that could ultimately save the deal.
Mortgage Payments for Three Months:
Offer to pay the first three mortgage payments for a potential buyer. On a $300,000 mortgage at 6 percent interest, the monthly mortgage payment would be in the neighborhood of $1,800 per month. Over three months the buyer would save $5,400 in mortgage payments. With a deal like this, how could they resist?
Decorating Allowance:
Offer buyers cold hard cash for upgrades, such as new carpet and a new paint job. With good negotiating techniques you could be able to get your client’s asking price while providing the buyer the special touches they are looking for in a new home. Adding those new plantation shutters they so badly wanted could be all that it takes to seal the deal without having to come down on price.
Yearlong HOA Fees:
The cost of monthly HOA fees often is only thing holding back a potential buyer from achieving the cash power to purchase his first condo. Rather than dropping the asking price, why not relieve them of expensive homeowner’s dues for the first year? This creative negotiation technique could be just what it takes to get a first-time buyer into his/her first townhome or condo.
Pay Off Bills:
Paying off a few of the buyers bills might be all that is needed to allow a buyer to qualify for a mortgage to buy your client’s home rather than having to buy a smaller, less expensive house. Several new loan programs are available that allow sellers to pay off credit cards, auto loans or other sources of debt for the buyer. This simple solution could allow your seller to maintain his/her asking price while still “sweetening the deal” for the buyer.
Pay Relocation Costs:
Moving costs can often be one of the most daunting expenses factoring into the decision to relocate. The costs associated with moving are often the only reason a buyer is holding back from taking the plunge and moving to a new city or state. By offering to pay their relocation costs for them, you are moving them one step closer to the home and lifestyle of their dreams.
Buy Down Points to Lower the Interest Rate:
Sell the “deal,” not the house. You can always drop your asking price, but in reality this doesn’t help the buyer nearly as much as cash back at the settlement table. For many buyers it is all about the monthly payment. For every $10,000 you drop on a loan at 6 percent interest, the buyer only saves $60 a month on their mortgage payment. Is that really that enticing? As an alternative, try coaxing them to meet your price but offering to buy down their interest rates with front-end points paid by the seller. A buyer who gets $7,500 on the table is going to be a lot more excited than one who’s price dropped $10,000. Think of it this way. If you are about to take a hit on the asking price of the home, it might as well provide a real benefit for the purchaser.
Pay Closing Costs:
This old standby is common for a reason: it’s reliable and it works! This may not be as fancy as the other techniques described above, but it is a time-tested solution that often offers exactly the incentive needed for a buyer to sign on the bottom line.
Howard Brinton is a real estate sales motivational speaker and the founder and CEO of Star Power Systems, a sales training organization that offers tapes, books, videos, conferences and a club that distributes selling techniques from the nation’s top producers.
