BluefoxToday blog : Home buyer incentives that work

Home buyer incentives that work

Home buyer incentive 

The real estate market is rather tough out there today. Property is moving very slowly. In many areas a glut of houses await visits from buyers who are patiently going from one property to the next looking for the best deal. Can't blame them. I'd do it, too, if I were shopping. This is their market, so go ahead and take advantage of it.

Knowing that, how can a seller attract a prospect to purchase his home? In other words, what type of incentives are likely to work? Price, of course, comes first to everybody's mind. That's a given. Besides price, the seller can offer to buy down the mortgage interest rate, say from 6.5% to 4.5% for the first year and maybe 5.5% the second year. It's always good to see the monthly payment a little lower, at least for a few years.

Another popular method is to pay a portion or all of the buyer's closing costs. They can add up to 2% to 7% of the loan amount, a large chunk of money for those who are short on cash. What about helping the buyer with the down payment? Especially with a first-timer it can frequently make the difference between being able to purchase the home or not. The above tactics work well because they save the prospect real money. It shows on the bottom line in terms of a lower mortgage payment and/or less cash withdrawn from the checking account. Unlike throwing in a vacation trip to an exotic location or a bunch of colorful appliances which don't save him anything.

Here's another tip. Offer the buyer a home warranty, a policy that covers a lot of territory in a house, including wiring, plumbing, heating and cooling. This gives him a peace of mind. Assures him that should something go wrong, the repair cost won't come out of his pocket. What are some of the other ones?  

_______________________________________________________________________________

Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst 

www.BluefoxToday.com - syndicated mortgage, housing and property management blog

eskokiuru@gmail.com
My cell: 702-499-1006

Comment balloon 5 commentsEsko Kiuru • July 25 2007 06:33PM

Comments

Esko - good tips. Things that can distinguish one home from the next is very important. This could be the deciding factor if it came down to two homes.
Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago
These are good tips, Esko.  Out here a lot of buyers gravitate towards newer homes because they believe that they're going to be less maintenance.  I like advertising the home warranty up-front as a relatively inexpensive way to alleviate many initial concerns.
Posted by Steve Leung (Silicon Valley Real Estate) over 10 years ago

Bill,

Buying down the interest rate can be a big help.

Steve,

Home warranty is pretty inexpensive, but covers a lot of ground.

Posted by Esko Kiuru over 10 years ago
I like the idea of buying down the rate, I haven't used that for awhile because the interest rates have been low, but as they creep higher I may have to start suggesting it again.
Posted by Ethan Dozeman, Real Estate in Grand Rapids (Realty Executives Platinum Group) over 10 years ago

Ethan,

Buying down the rate is one of the better ones.

Posted by Esko Kiuru over 10 years ago

Participate