A common question that many real estate agents are getting from sellers is whether we should offer a price reduction versus a seller’s incentive. Seller incentives can be in the form of closing costs or interest rate buyouts.
First time home buyers
First time home buyers are price sensitive and strapped for cash. Often, payments and cash reserves are low. When cash is an issue, closing costs are more helpful. Many times, they have the income to qualify for more, not the down payment and closing costs.
Buying interest rates
When income is an issue, and buying interest rates is more effective. If a buyer’s ratio is off, buying interest rates can lower the income-to-expenses ratio. We can take a buyer who doesn’t qualify at a certain price and help them out by lowering the rate. It is often less expensive to buy a rate than to lower the rate because of how the ratio works. Buying rate can be the difference between making a deal and no deal for the buyer and seller.
Price Reductions vs. Seller Incentives
Buyers shop within pricing brackets. If you’re listed at a price outside of their price bracket, your home is invisible to buyers because they’re not looking there. In this case, buyers are looking to lower the price to get into the bracket. If offered to purchase closing costs or interest rates, the home must still be appraised. Decreasing the price helps ensure the diagnosis isn’t a problem.
Psychologically, a lower price is more attractive to home buyers.
The result
There is no right answer when considering price reductions vs. seller incentives. In general, for greater exposure, reduced valuation risk, and often slightly higher net income, direct depreciation is usually the superior choice.. Buyers’ incentives are best deployed strategically: to help a cash-strapped buyer or to proactively solve a particular property problem without having to arrange repairs.
It is best to discuss this with your experienced agent. Experienced agents know what type of concession package vs. pricing might be best for your home. Experience matters. When you hire an agent, you choose to find the best buyer for your home in a timely manner. Time is money. When the market is deteriorating, the longer a home sits the more it costs the seller.
The immediate value of your home
Use our instant online home appraiser at www.swflhomevalues.com If it’s a condo, be sure to put your unit number there. You will receive an instant estimate of your home value along with your equity position. Our system automatically calculates what you owe. If you have overpaid, you can adjust that too. Each month our system will email you the latest price depending on what the market is doing. Homeowners love this feature. Even if you’re not interested in selling today, it’s a good idea to keep an eye on your home’s value.
You can always call Brett or Sunday Alice 239-310-6500 We’re here to answer your questions and help you decide what’s best for your family. We have market statistics and insights that we can share with you. Every person’s situation is different. We’d love to hear your situation and together we can discuss what that means for you. We also have resources you may need, so let’s talk.
Good luck and happy home selling!
