Incentives to Buyers in lieu of lowering asking price

kit2007

15 years ago

Our agent is supposed to call me this AM to discuss lowering the asking price of our home. Since we are already the lowest priced home in our neighborhood (one other house is asking the same as us), I'm not sure that lowering is the best action to take. If we lower $10,000 and a buyer needs to come up with a 3% downpayment, the buyer will only initially save $300. But, if we offer $5,000 back to the buyer for closing costs, the buyer will actually have an immediate savings of $5,000.

I do not see any other homes for sale in our area offering this cash for closing costs (and hardly anything is selling), and I feel it would really help stimulate interest in our home.

Opinions??

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Comments (6)

margaret_garfield
15 years ago
It might help (won't hurt). But in my area, the buyers seem to assume the seller will help with closing costs, and just include that in their offer. So, your saying it wouldn't make me lean towards your house, I would just figure everyone else would too.

Why wouldn't a seller help with closing costs? I know that they would end up paying taxes and commission on that amount, but that is tiny in comparison to the money they are getting.

Margaret
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terezosa / terriks
15 years ago
Why wouldn't a seller help with closing costs? I know that they would end up paying taxes and commission on that amount, but that is tiny in comparison to the money they are getting.

Why do you assume this? The seller will only pay tax if their gain is over $250k for a single person or $500k for a couple. Also, a seller should make it clear to their agent that they will not pay commission on buyer incentives.
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marys1000
15 years ago
I certainly don't think it can hurt to try. I'm not sure, maybe others can elaborate but I think cash back for closing more particularly helps first time buyers, or perhaps buyers stretching a little to get into a particular school district that's really desirable. If that's your market I think it could be a big deal, especially to first time buyers who maybe don't initially understand how it can make a home more affordable. If they see it in a listing they might ask their realtor to explain it.
Have you thought about your price in terms of the searchable category? I.e. if your price is 276,000 many people might put 275,000 into realtor.com or the mls. In my case previously, one of the largest real estate business' in town had a drop down menu on their website - so it was important to look at their cut offs when making a decision on price, whether initially or when dropping the price, to ensure that you would have a new market of lookers. Hope that makes sense:)
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kit2007
Original Author
15 years ago
"Also, a seller should make it clear to their agent that they will not pay commission on buyer incentives."

terriks, what does this mean? Do you mean that if I give $5000 to a buyer for closing costs, I should tell my agent that I am subtracing that from the asking price for the purpose of computing commission? That would be great! Do agents typically go along with this?
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terezosa / terriks
15 years ago
Yes, agents will agree to this, in fact some that I know actually suggest it themselves.
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margaret_garfield
15 years ago
"Why wouldn't a seller help with closing costs? I know that they would end up paying taxes and commission on that amount, but that is tiny in comparison to the money they are getting."

"Why do you assume this? The seller will only pay tax if their gain is over $250k for a single person or $500k for a couple."

I only meant county tax. In my area, we pay something like 1.5% of the sales price to the county.
Margaret
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