Real Estate Advisor: October
Selling Tactics: Buyer’s Incentives for a Slow Market
In a slowing market, sellers can find it tempting to believe in magic solutions. With unsold inventories growing in most areas, some sellers resort to offering flashy incentives for buyers. Everything from big-screen TV’s to vacation packages are being tacked onto listings in the hope of luring in interested buyers.
In truth no amount of flash or gimmickry will change how buyers feel about your home’s core qualities, but incentives that appeal to a buyer’s wallet can be effective in certain situations. Below are some buyer’s incentives that may help set your home apart from the rest:
Paying Points - The current housing slump has placed mortgage concerns in the minds of many buyers. Sellers who offer to pay mortgage points for the buyer (sometimes referred to as “buying down the mortgage”) are more likely to attract buyers who are nervous about their monthly payments or interest rate. Each point you pay equals 1 percent of the loan amount, so mortgage buy downs lower both the interest rate and the monthly payment.
Down-Payment Aid - One of the biggest hurdles for many homebuyers, especially first-time homebuyers, is the down payment. Help with the down payment may in many cases be more important to the buyer than the actual asking price itself. This incentive works well for those selling “starter” homes that are more likely to draw first time homebuyers.
Closing Costs Help - Legal fees, title insurance, filing fees – closing costs can add up in a hurry for buyers, typically totaling somewhere between 2 and 7 percent of the total loan amount. Sellers who offer to assist with the closing costs will appeal to cash buyers short on cash
Home Warranty - Including a year (or two) of home warranty coverage serves as a peace of mind for the buyer that they won’t have to foot the bill for unexpected repairs in the first year or two of ownership. Most policies include service to the home’s HVAC, interior plumbing, appliances and major fixtures. The low cost of home warranties (typically a few hundred dollars) makes them a low risk-high reward incentive to offer.
Maintenance Fees - Some features of a home that you may consider “selling points” (pool, hot tub, sauna, gas fireplace, AC system, etc) can actually seem like detractions to buyers due to their related maintenance costs. You can assuage a buyer’s concerns by offering to pay for the first year’s worth of maintenance.
Landscaping - Offering to spring for a few additional landscape features can be a nice way to let buyers add personal touches to the property without taking on personal expense. Keep in mind that adding such touches on before putting the home on the market may have a greater impact (provided, of course that your landscaping choices aren’t woefully misguided).
Condo/Homeowner’s Association Fees - In a condominium complex or planned community, homeowner’s dues add to the monthly cost of ownership. If the first year’s worth of dues are taken care of by the seller, potential buyers have one less early-expense to worry about.
Price Reduction - Price reductions don’t usually come to mind when discussing incentive strategies, but really no single factor is more important than the asking price. A well-timed price reduction can indicate to buyers that you are flexible and serious about selling the home.
Upgrades - In most cases major home repairs and touch ups should be completed prior to putting the listing on the market. However, offering to finance certain aesthetic changes, such as new exterior or interior paint, can be marketed as a means for the buyer to add their own personal touch to the home.
Extras - If you’re going to offer a “throw-in” as an incentive, why not tailor the offer to the charms of your home? For example, the antique hutch that perfectly compliments your entryway might be included in the list price. If you’ve invested time and money in a prized back deck, including a premium gas grill could be a logical pairing. Buyers often view wild incentive offers with skepticism, but “thoughtful throw-ins” don’t carry the same air of desperation.
Using Programmable Thermostats
One of the smartest ways for homeowners to cut down on energy costs is to install a programmable electronic thermostat. While commonplace in new construction, many older homes rely on manual mercury thermostats. Programmable thermostats are:
Bring along the brand name and model number of your old thermostat as well as your heating and air conditioning units to make sure any new thermostat you purchase will be compatible. Look for models that have earned the Energy Star designation – these units have met strict energy efficiency guidelines set by the government.
In general, programmable thermostats fall into three categories. 7-day models allow you to customize the heating schedule for each day of the week. 5-2 day models allow you to set one heating schedule for weekdays, and another for weekends. 5-1-1 day models allow you to set a schedule for weekdays and individual schedules for both Saturday and Sunday.
While thermostats can be replaced and installed DIY-style, in most cases it’s usually best to leave the job to the professionals. Many retailers will provide installation at either no cost or a nominal fee. A certified HVAC professional can also install and setup your thermostat. The thermostat should be installed on an interior wall, away from heating and cooling vents and any other sources of heat or drafts (fireplaces, doorways, skylights etc.).
All thermostats with the Energy Star seal of approval allow 4 default program periods per day, allowing you to set different temperatures for morning, day, evening and night. Here are some rules of the road to help maximize energy efficiency: