Do Buyer Incentives Encourage A Sale?


Do Buyer Incentives Encourage A Sale?
By Scott Rogers • March 24, 2008
Many sellers think so.....but I rarely meet buyers who think so. You have likely heard of incentives that sellers offer buyers, such as: seller to pay up to $3,000 of buyer's closing cost seller to pay buyer's first three mortgage payments seller to pay for one year of property owners association fees seller to pay for one year of trash service free car (really!) free entertainment system Sellers often hope to set their property apart from others by offering a buyer incentives to purchase their home. In theory, with two identical houses with identical asking prices, if you get a year of trash service with one, and not with the other, all buyers would pick the house with free trash service --- right? But wait --- all such logic goes out the window given the negotiation process! For instance, it is quite possible that when presented with an offer, the seller of the house without free trash service might come off of their price by $8,000, while the seller of the house with free trash service might not negotiate at all. As becomes clear --- the existence of a buyer incentive does not at all guarantee a better opportunity for the buyer --- and buyers know this! Additionally, buyers can ask for and attempt to negotiate any term they so desire in a contract. If you want free trash service from a seller who isn't offering it --- ask! If you want closing costs from a seller who isn't offering them --- ask! I rarely find a buyer who is bashful to include such concessions in an offer, even if it is not being advertised by the seller as being possible. Thus, the non-existence of a buyer incentive doesn't mean that the concession won't happen --- and buyers know this! A few final notes . . . If we're in a strong seller's market (which we're not as of 3/2008) where sellers can demand any asking price they desire, a buyer incentive can work --- it highlights flexibility in negotiations. I find it especially interesting when a seller advertises a buyer incentive, and then tacks on "with full price offer." If, given the choice of a year of POA dues (value roughly $480) with a full price offer, or negotiating $1,000 (or more) off the asking price --- I'd ignore the incentive and negotiate on price! Advice to buyers --- don't be distracted by incentives, other than to acknowledge the stated flexibility of a seller before negotiations even begin. Advice to sellers --- lower your asking price by the value of the incentive --- that is effectively what you have done anyhow (by revealing your flexibility to those who see that detail), but without the mass benefit of a lower asking price. Lastly --- I'd love to be proved wrong! Are you a seller who has seen the value of offering a buyer incentive? Tell me about it! Are you a buyer who decided to buy a home because of a buyer incentive? Tell me about it! Receive Updates by Email Recent Articles: There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos How Much Would You Value Not Having To Prepare Your Home For Showings? One Out Of Four Homes Is Taking Longer Than A Month To Sell Consider The Cost Of Your Planned Renovations When Planning Your Offer
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 21, 2024 (unless otherwise noted).
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