Flashy incentives like a trip to Tahiti might sound like a good way for home sellers to woo buyers in a dismal real estate market, however,  when it comes to actually enticing someone to buy a home, it’s the more practical perks that count.

Serious buyers are looking for a place to buy a home, not a trip to Tahiti. Moreover, lenders are leery of gimmicky incentives, fearing that they’re built into the price of the home and that loan dollars are being used to pay for that tropical trip.

Instead, effective incentives address what’s on the minds of potential buyers — the overall cost of the home and the monthly payments they’ll have to manage. Help in bringing down the interest rate of the mortgage by paying points, for example, can give one home an advantage over another. And contributions to the down payment and closing costs could especially be of help to a first-time home buyer.

Incentives can be considered when the home is first listed, as a way to distinguish it from the start. They can also be added when the home hasn’t sold in two or three months, as a way of enticing a buyer without lowering the price. Or the incentives could arise in negotiations, when a buyer needs that one extra little nudge to commit.

Make no mistake, the location and condition of a home are going to be its main selling points. But if sellers put on their buyer’s cap and really consider what issues the buyer might have, it could make all the difference.

I advise my sellers to look at  the bottom line. A seller should figure how low he or she is willing to go, factoring in both the selling price and other incentives used to get a buyer to commit.

But also be aware that most seller concessions need to be disclosed. Everything should be in writing and attached to the contract. When someone says, “let’s not tell anybody” about an incentive, it could signal imprudence.

In addition, buyers and sellers need to make sure that they don’t exceed the lender’s allowable seller-paid assistance.

Below are six of the most common incentives being used in markets today.

Reducing the Price
A price reduction is often the incentive that is looked at first. The price is something that is a common currency — it appeals to everybody. If a buyer has in his or her mind that they’ll pay $350,000 for a home and the seller won’t budge from $375,000, “$5,000 in closing costs and a plasma TV are not going to get it done.

Paying Points
Sellers can offer to pay mortgage points for a buyer, a good incentive to use when interest rates are rising and at the front of a buyer’s mind. One point is 1% of the loan amount, charged as prepaid interest.

When a buyer sees a lower interest rate or monthly payment, that’s something they can relate to. The setup makes sense for a buyer who has to buy furnishings for the new place; it also can make for an easier monthly payment transition for families that are upsizing.

Buyers should understand, however, that the lower rate often lasts only from one to three years. Before accepting, understand and plan for the point in time when the mortgage bill will increase.

Down-Payment Aid
For some buyers, the hardest part of entering the ranks of homeownership is the down payment — also an area where a seller can help. It’s mostly first-time home buyers interested in this kind of assistance because they’re often the ones lacking in funds to complete a deal.

It gets people into homeownership, the disadvantage is that the buyer is financing that additional amount, because a seller would likely come down in the price of the home if a chunk weren’t dedicated to down-payment assistance.

Closing-Costs Help
Closing costs include items ranging from legal fees to title insurance and can add up, ranging between 2% and 7% of the loan value, according to Freddie Mac. So many buyers, especially those stretching to make a down payment, will be interested in having a seller help out.

In many markets, buyers in every price range have been asking that these costs be covered, and they’re ask for it because they know that they’ll get it.

Adding a Warranty
A residential-service contract, often referred to as a Home Warranty  is sometimes thrown in as an incentive because it acts as insurance for a home’s systems, often including plumbing, heating and cooling for the first year of ownership. At a cost of a few hundred dollars, some real-estate agents consider it an inexpensive add-on that affords a buyer a little extra peace of mind. That peace of mind can be especially welcome during the first year in a house.

The Little Things
Other perks will appeal to buyers, too, ranging from the common to the unique. Payment of homeowner association fees — typically associated with condo developments — are sometimes offered. A seller with a swimming pool might also offer a year’s worth of upkeep for it, a welcome help for those worried about the maintenance of the backyard attraction. Or maybe, if a corner of the home was designed for a grand piano, leaving that instrument behind entices a buyer to go through with the deal.

If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please  give us a call and we’d be happy to assist you!

The Opland Group  Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in;    Bexley    Columbus    Delaware    Downtown    Dublin    Gahanna    Grandview Heights   Granville   Grove City   Groveport    Hilliard   Lewis Center    New Albany   Pickerington    Polaris    Powell      Upper Arlington    Westerville    Worthington