Setting Incentives For Buyers: 13 Options Sellers Should Consider

In most parts of the country, the strong seller's market we've been experiencing for several years is softening -- which means that as a seller, it might not be as easy to find a qualified buyer for your home as you'd hoped. If you're in a situation where you really need to sell sooner rather than later, don't panic; there are still plenty of options you can leverage if you want to grab buyers' attention and get them through the front door to take a look ... and hopefully all the way to the closing table.

Before you give up on your home sale, consider some of these potential buyer incentives that might move the needle for you. Several of them could be possibilities for you, and at least one could be the clincher that gets an offer submitted sooner rather than later.

Include furniture or window coverings

Buyers will have been warned by their mortgage broker that they really shouldn't make any big purchases before they sit down at the closing table to transfer ownership of the house, but there are a lot of things that any buyer is going to need when moving into a new place, especially one that's bigger -- furniture and window coverings among them. Those happen to be two relatively pricey areas, so if there's any furniture you're willing to leave behind, or you're not attached to the blinds or curtains in your home, offer to include them in the sales price of the home.

Window coverings might be easier to part with than furniture because they're typically made to fit the home, so they don't transfer as easily, but don't underestimate the power of offering your guest room furniture or a sofa or two, especially if you know buyers are moving up from a smaller place. It might take them months after the sale closes to be able to afford furnishing the house the way they'd prefer, and if you can give them a jump-start there, it could sway them toward your house over another similar property that's not going to include any furniture.

Buy down their interest rate

Buyers have the option at closing to buy down the interest rate that their lender has offered them. This means paying more upfront on the loan (a percentage of the home's total sales price) but a lower monthly mortgage payment over the years, which is enticing to any buyer, but especially buyers who might not have the best credit -- and therefore might not have secured an optimal rate -- or buyers who don't have a 20% down payment and will be paying mortgage insurance on the loan over its lifetime.

If you can afford to buy down the buyer's interest rate, this can be an incentive with wide appeal. Although mortgage rates are nowhere near historic highs that we've seen in past years, they've been creeping up from the near-historic lows where they lingered for almost a decade, and buyers who can buy down their rate right now will feel like they didn't miss out on the good times while they lasted.

Pay for closing costs

Closing costs encompass between 2% and 5% of the home's total sales value, which can be a hefty burden for buyers -- but if you've got a lot of equity in your home, or the sales value has significantly increased since you bought it, then you might be able to afford to pay for closing costs fairly easily, and this can really make a big difference to the qualified buyers looking at your home as one of many possibilities. There are plenty of options within closing costs in terms of offering an incentive, too; you don't necessarily need to pay for all of them, but letting the buyer's agent know that you're willing to take on the title fees and homeowner's title insurance, for example, can whet a buyer's appetite to make an offer and close a deal.

Even if paying for closing costs in their entirety just isn't in the cards for you, there's a lot of wiggle room in closing costs -- especially around the title company's fees. The buyer is going to choose a lender, of course, but if you as the seller have control over which title company to use, you can shop around and opt for one that has comparatively affordable fees, and then relay that information to the buyer's agent.

Offer extra commission for the buyer's agent

Sometimes the best way to incentivize a buyer is to incentivize the buyer's agent -- and an increased commission or a buyer's agent bonus might just do the trick. You can either advertise that the commission rate for the buyer's agent is half a percentage point or even a full percentage point higher than the local norm, or you can offer a straight cash bonus of a few thousand dollars to get the buyer's agent's attention.

This type of incentive can work to a seller's advantage in a few different ways: Not only will the buyer's agent likely be more interested in touting the benefits of your home in particular, but they might also notice it in a listing search when it otherwise might fall through the cracks, either because it's already been on the market for a while or for another reason. This is an incentive to be careful with, of course -- if an unethical agent is offered a bonus and doesn't disclose the offer to buyers, and they find out at the closing table, there could be a big problem -- but as long as the buyer's agent is clear about what's going on, most buyers are happy to see their hardworking agent get a little extra for closing a sale.

Give a credit for expedited closing

So far, we've covered several situations where a buyer's circumstances might make an incentive more enticing -- but sellers have needs, too, and one of them usually revolves around the timeline of the sale. There are always circumstances where it would be much better for a seller to offload the listing sooner rather than later, and the good news is that there are also opportunities to offer incentives contingent on the timing of the sale, giving the sellers what they need (a quick sale) and buyers what they want (a little something extra on top of a new home).

The expedited closing credit could be a cash bonus, or buying down the interest rate, or any number of other options, but the key here is that the seller makes the incentive part of a quid quo pro: We get to the closing table and hand over ownership by this date, and the buyer gets the incentive. An incentive like this can cut down on the back-and-forth between buyer and seller during the closing process and can really motivate the buyers to solve any issues quickly and creatively. 

Warranties are golden

First-time buyers especially might feel understandably nervous about taking on the responsibility of owning a home -- after all, if something breaks or is damaged in a rental property, it's the landlord's job to fix it (and pay for it). Offering buyers a warranty for the appliances in the home or some of the systems, like heating or air conditioning or even plumbing, can open up your house to a wider pool of buyers who are feeling a little bit anxious about what could go wrong. 

If you already have a warranty on some of these items, it could be as simple as figuring out how to transfer ownership; if not, talk to your listing agent about how much it might cost to secure a warranty for the buyers. Warranties are usually a lot less expensive than you might think, and the peace of mind that they bring to the buyer can work wonders for your sales process.

Pay some HOA dues

If your home is in an area with a homeowners association (HOA), another incentive you might be able to offer buyers is prepaid dues for a period of time -- up to you how far into the future you want to go, but six months can provide buyers a decent cushion for getting caught up with finances after a home purchase, and a full year can be a real draw depending on how expensive the dues are and what the HOA includes. 

Make sure any buyers are aware that your largesse won't last forever; they'll be on the hook to pay the HOA themselves once those prepaid dues run out, but in the meantime, you've got them covered, and it'll be a little bit of extra money each month that they can use on furnishings or to fix up the house to their liking.

Prepay property taxes

Like HOA dues, property taxes are a part of homeownership that might take first-time buyers especially by surprise. As a homeowner, you already know that your mortgage payment includes not only the principal on your loan and the loan interest, but also homeowners insurance and taxes. If you can alleviate the burden of one of those items (and property taxes is usually the easiest one to handle), that can be an inviting incentive for buyers, either by lowering their monthly payments initially, or by starting them off in their new home with a larger-than-expected escrow balance and giving them a little bit of breathing room in that regards. Talk to your listing agent about how much it might cost to prepay property taxes for buyers; if you can take care of taxes for the year, it will certainly help attract more buyers to take a look at your home and consider whether it might be a good fit for them and their lifestyle.

Make repairs -- or offer credit for them

It's more than likely that the inspector is going to find something that needs to be replaced or tweaked on your home -- in fact, it's almost inevitable. Who's going to pay for any necessary repairs? Or what if the buyers request repairs that aren't necessarily backed by an inspection report but that seem to be important to the buyers nonetheless?

You probably already have relationships with a local electrician, plumber, general contractor, and other professionals whom you've trusted before with your home, and it can help expedite your sale and make buyers more amenable in other areas if you let them know upfront that you're willing to handle necessary repairs. (One cautionary note: You may want to define pretty clearly what you mean by "necessary" so you don't wind up fielding wild requests, such as "we'd really like a kitchen/bathroom remodel before we buy" -- buyers aren't always reasonable or realistic, so it might be up to you to set boundaries for them.)

Leverage your own profession

Depending on what you do for a living, you might be able to offer buyers an incentive that has little or nothing to do with the house itself, but that might nonetheless be enticing enough for them to consider making an offer. Let's say you're a lawyer who specializes in divorce and you happen to know that your buyer is going through a trial separation -- would it make sense for you to offer a certain number of hours of your time to that buyer? Or if you own a local restaurant, can you throw in some vouchers or gift cards for free meals to ease the transition from one place to another?

This might not work for every seller, but you might be surprised by how many buyers could use a decent marketing consultant, accountant, tree surgeon, landscaper, or any number of other professional services. Think about what you can bring to the table and consult your agent about what they think might work nicely for you.

Arrange to make the move easier

Nobody actually enjoys moving, especially if you're packing up and transferring an entire household from one place to another. Is it possible for you to offer an incentive in terms of helping the buyer hire a moving company or rent a truck for the move? Could you secure the services of an all-purpose helper who can assist with unpacking, or a cleaner who can tidy up after the unpacking is mostly over with? What about renting a facility for the buyer in case the timing is a little off and they have to put some or most of their possessions in storage until closing? Even if it's something as small as ordering them dinner for a week while they get settled in, offering to help with the move can instill a sense of goodwill in your buyers and possibly get you a deal closed.

Reduce your asking price

This typically isn't the option that sellers are leaning toward, but if your house has been sitting on the market for more than 30 days and you haven't had any serious offers, it might be time to consider the fact that you may have overpriced it for the current market. Think about the listing conversation you had with your agent before you put the house on the market and ask them for their opinion -- then really listen to what they have to say. 

Yes, it's possible that the house two streets over sold for over asking price within a week, but it's also possible that house had a fully remodeled kitchen and a much better view from the back patio than yours does. See if your agent can do some research into what different buyers did after they looked at your house -- studying which properties they ended up buying and how they measure up to yours can really help attune you to the realities of the market you're in right now. It's hard to accept the reality that your house might not be the very best one in the neighborhood, but the market doesn't lie. 

Think outside the box 

A buyer's incentive doesn't necessarily have to involve the house itself. Maybe you have a friend who's a travel agent you can ask about vacation packages -- you might be surprised by how affordable some packages can be (less than $1,000 but valued at $1,500 or more), and throwing a trip to Maui or Miami for your buyers might be just the nudge they need to make an offer on your house instead of another. Other options could include season tickets to a local sports team, a country club membership, even a subscription to a dinner service.

Selling your home in a market when prices are softening and there don't seem to be as many qualified buyers can be a real nightmare, but there's a lot you can do to ease the struggle. See if one or more of these ideas might work for your situation, and talk to your agent about which one could get you the most offers ... then try it!