Learn what incentives to consider while buying or selling a home.
No matter the market, there are always motivated homeowners looking to sell ASAP. Some may want to move quickly, others might need the money. To make their home more desirable to buyers, these sellers may offer incentives.
If you are said seller and you think it might be tough to get your sale done, we’ve got a few incentive ideas you might not have considered. You can either offer these out of the gate and advertise them as incentives, or keep them in your back pocket to use as a negotiation tool.
Buying down the interest rate
Most home buyers today need to take out a mortgage loan to make a home purchase. Banks typically offer buyers an interest rate based on the market at the time they apply.
For buyers: If you want to lock in an even lower rate, you can always pay an upfront fee, called a point. Paying upfront is called “buying down the rate,” which sellers can do for the buyer.
For sellers: If you offer this type of incentive, it could be pretty appealing to buyers and help your home stand out — especially in a competitive market.
Here’s an example of how buying down a mortgage interest rate works: if a bank offers a buyer a 5% interest rate on a 30-year fixed mortgage, the buyer (or seller) can pay 1% of the loan amount to get something like 4.75% instead. For buyers, this means locking in lower monthly payments, which could be more valuable than a small reduction in the final purchase price.
Including furniture or window coverings
Getting furniture and basic decor after closing can be a huge additional cost when buying a home. When touring a house in person, a buyer might love everything about the place so much that they’ll want to purchase the house and all the furniture in it. Maybe the seller won’t want to keep their furniture anyway.
For buyers: If you’re interested in the furnishings, it can’t hurt to ask if the seller is willing to throw them in.
For sellers: If you don’t want the hassle of moving your furniture from one home to another (or into storage in between transactions), this could be a good option for you. This could also work for you if you don’t think your current furnishings and decor match with your next home.
Giving credit for non-recurring closing costs
It’s fairly common for buyers to request some sort of repairs on a home after they make an offer, but before closing.
For buyers: After you make an offer on a home you love and the inspection happens, you might request repairs before going forward with the deal. That list could range from fixing a broken bathroom exhaust fan to replacing a window. Note that if you choose not to request repairs at this stage, you’ll have to make those fixes yourself. But some sellers won’t want the hassle of making any repairs and might offer you a credit instead. Said credit will likely come in the form of cash in your pocket at closing, and you can use it for whatever you want.
For sellers: If a buyer requests a repair, but your remedy isn’t done right or to that buyer’s expectations, it can hold up the whole selling process. If you don’t want to deal with it, you could try to incentivize buyers to go forward with the sale without addressing any repairs by offering a credit that will go towards covering their closing costs. Ultimately, this could save you time and maybe even money, depending on the requested repairs.
Offering the buyers’ agent a higher commission
Listing agents often market their properties to buyer’s agents. While a good buyers’ agent should tell their client about every home that’s relevant to their wants — no matter the commission — sometimes when sellers offer them a bonus, it could bring some necessary awareness to a “stale” property.
For buyers: This method could see your agent encouraging you to reconsider a home you passed on too quickly before, or it might even bring homes they missed before onto their radar, giving you more options.
For sellers: It’s not uncommon for a seller to offer a 0.5% or even 1% bonus commission to the buyers’ agent if their property isn’t getting much interest. Selling agents tell buyer’s agents about these offers by interoffice communication and word of mouth. (Don’t forget, a good agent is well connected and keeps tabs on what’s happening in their market.)
Giving a credit for a ‘close by’ date
A motivated seller might have a variety of reasons for wanting a quick closing, such as tax purposes or a deadline for a job transfer. Sometimes their reason might encourage them to offer a monetary credit for meeting their preferred closing date.
For buyers: If a seller wants a quick closing, they might offer you a credit, and maybe even a bonus commission to your agent for moving fast. If your situation allows you to be flexible and close sooner than you originally anticipated, this could be the right move for you — especially if you could receive an incentive.
For sellers: Offering buyers an extra incentive for closing by a specific deadline could attract more interest and help you get it done quicker than you would otherwise. Ask your agent about including this bonus in your Zillow home listing.
Here’s an example of when a seller may give a close-by date credit: the seller may own a home that they don’t use much (A.K.A. the home you want to buy), and they’ll have to pay a lot of property taxes if they don’t sell by a certain day. If they can sell before that deadline, they could avoid having to pay those fees.
The bottom line
If you’re a seller, you can offer incentives and promote them in a number of ways, like mentioning them in your home listing. Putting incentives out there as a marketing tactic could benefit both you and your buyer. If you’re having a hard time finding buyers or you know your home will be a tough sell, advertise your incentives implicitly. These offers could help move a stalled deal over the finish line come closing time, too.
