Creative Ideas and Tactics Can Speed Home Sale
When the market is slow or you’re in a hurry to sell, look for agents with creative ideas and aggressive sales tactics that go beyond the standard practices. An enterprising agent can contact neighbors within a certain radius to let them know your home is available, for example, to suggest that their friends or relatives may be interested in the area. Your agent can make personal visits to these prospects, or distribute or mail a letter and information sheet, rather than just sending a card.
The agent can also take advantage of other brokers’ and agents’ open houses by “piggybacking”--that is, holding an open house for your property on the same day and at the same time, and making an agreement with the other agents to direct visitors to one another’s open houses.
If the brokerage firm you are using is a large one, it may be able to offer more expensive marketing tools, such as listing your home in a directory arranged by town and price range, videotaping it for special buyer videos, or listing it in home guides published in different languages.
In some area, there may be opportunities to show it on cable television programs too. Or perhaps the brokerage can furnish you with special “For Sale” signs that invite drivers to tune in to a specified channel for radio-broadcast information about your home.
These marketing resources make it easier for prospects to hear about your home and can help capture impulsive buyers. Although it’s important to choose a broker based on his or her knowledge, experience and track record, in a down market it’s best to give more weight to those who offer extra services and use aggressive selling techniques.
Before deciding on these services, however, ask the brokers whether a particular marketing tactic really sells homes. Don’t settle for a quick yes; ask for proof.
Other potentially successful techniques that you can employ yourself are warranties, selling to a broker or developer and offering various incentives for agents, brokers and buyers.
Home Warranties
Offering a home warranty to a buyer can help close a sale. Warranties appeal especially to first-time buyers who are financially strapped and nervous about future maintenance bills.
During the first year of ownership, a home warranty policy guarantees to pay for repairs and heating systems, after a deductible fee is paid. Warranties also help protect the seller and broker against lawsuits by the buyer if appliances or systems break down after the closing.
A home warranty is a particularly good selling tool for an older home with more worn appliances and systems or for any home that needs work or is poorly maintained. Sellers of older homes with known problems may have to pay a higher premium or have certain systems excluded from the warranty.
A number of real estate firms, lenders, home inspectors and other companies (but not insurance companies) offer home warranties, which usually cover a period of one year from the date of closing, but some also cover the home during the listing period. Companies generally sell warranties through real estate agents, not directly to sellers. People selling on their own, however may be able to obtain a warranty. A few brokers even pay for them themselves because they believe warranties are an important selling incentive.
As the seller, you do not pay for the warranty until your home is sold. The typical cost of a one-year home warranty ranges in price from $325 to $400, and the average deductible is $100.
There are other kinds of home protection incentives for buyers, including your paying warranty costs on the appliances in the home or paying the buyer’s first year of homeowner’s insurance. A home inspector may also offer a warranty based on an inspection report.
An inspection report and warranty coverage are two strong marketing tools that may convince buyers that your home is a prudent investment, if only because it is unlikely they will have to meet unexpected repair expenses in the future.
Selling to a Broker or Developer
If you can’t sell on your own or with an agent, you may be able to find a local broker to buy your home, often at below-market value. For example, the national realty company ERA offers the seller the option, at the time of listing, to enter into an agreement that calls for the house to be sold to ERA at an established price if the house does not sell on the open market after a 210-day period. However, you must close on the purchase of a new home through an ERA-designated broker by that time.
You will need to check out carefully the terms and price available through a brokerage that offers such a home-buying service. At ERA, for example, you pay for one appraisal and ERA pays for a second. ERA then offers you the price it will pay before a listing agreement is signed. If you accept ERA’s offer, you agree to pay a commitment fee at the time of cancellation, equity advance or closing. When ERA resells your home, any net gain minus sales and holding expenses is reimbursed to you. Any loss is absorbed by ERA. In 1991, 500 applications were made for the plan out of 250,000 transactions.
Understand your rights, obligations and the terms of your contract before you enter into any agreement to sell your home to a broker. Such a plan merits consideration if you must sell quickly or need the equity from your home to move. In return, you must be willing to accept a price that is probably lower than the market value of the property, and perhaps pay other additional fees.
Selling to a Developer
If you want to buy a home in a new development, inquire if the builder will purchase your old home in return for your commitment to buy one of the units. Assuming you’re moving up, you pay the difference between the two home prices. The builder may offer a discounted price for your property, but if you haven’t been able to sell through conventional routes, it may be your best offer--and a way to move into the home you want. In a slow market, there are many anxious developers eager to sell their homes, and you will probably get a brand-new home at an even greater price reduction.
If the builder refuses to buy your home, he or she might at least agree to a sale that is conditional on the sale of your present home. This contingency allows you to back out of the contract if you ultimately can’t sell your home. When sales are slow, developers are far more willing to consider such arrangements.
Incentives for Agents
In a soft market, some agents may ask for higher commissions or bonuses in return for working harder to sell your home. Typical bonuses run from $1,000 to $2,000, but some agencies ask for more. For homes priced in the million-plus range, some anxious sellers offer bonuses as high as $50,000.
For the average-priced home, it may help to offer an agent a commission one or two percentage points higher than the standard in your area. Usually the extra 1% goes to the selling broker. If an extra 2% is offered, the additional commission may be split between the listing and selling brokers, or all of it may go to the selling broker. The brokers then decide whether to split the extra commission with the listing or selling agent or give the agents the full amount. A bonus commission offer can be conditional on selling the home within a specified length of time, or it can run the duration of your listing contract.
You can specify that you will pay more--say, 8%--if your home is sold within a month or two. This gives agents an incentive to sell your home when it is fresh on the market and likely to attract the most attention. An extra 2% commission on a $200,000 home is $4,000 over the usual amount, but it may be worth it if you would otherwise be paying two mortgages for several months. Ask your agent if listings offering a higher commission have sold faster than equivalent standard-commission listings. If not, agreeing to pay a higher commission does not seem worthwhile.
For a bonus or higher commission to work, your home must be realistically priced. Otherwise, agents face too big a stumbling block to selling your home and aren’t willing to put in the extra work required. Bonuses and extra fees work best for unusual and expensive homes, those that have been on the market for a long time or sellers who need to find a buyer fast.
In any case, if you do offer a bonus or large commission, select a top agent who has demonstrated an ability to sell your kind of home in a weak market. He or she should be a hard worker with creative marketing ideas, an aggressive marketing plan and the willingness to spend time and money promoting your home.
Incentives for Buyers
Next to a reduced price, buyers respond best to offers of cash and help with financing their purchase. Giveaways, such as trips, tickets to special events, gift certificates and the like rarely motivate prospects to buy a home. These incentives may, however, get you some publicity and bring in more buyers. Someone who wasn’t necessarily in the market for a home could read or hear about your offer, then become interested in the property. If you do offer an incentive, make sure your agent promotes it in any advertising and networking he or she does for your listing. And ask the agent to send out a notice to other brokers announcing the offer.
Offer gifts that are readily available and relatively inexpensive to give. For example, if you are moving and would be left with a car or boat in good condition that you no longer need, an expensive cedar swing set (for buyers with children), a transferable membership to a country club or swim club, a time-share at a nearby resort area you haven’t been able to sell or season tickets to a local football team or a concert series, offer to include those items in the sale of your home.
The price of such giveaways may range from a few hundred dollars to less than $10,000, except for a time-share, which might have cost you $20,000 to $30,000 when you purchased it. Still, given the notoriously poor resale market for time-shares, you can afford to add one to the purchase price. The primary advantage of offering an incentive versus cutting your price is that incentives are usually perceived by the buyers as costing more than they do, and they can generate excitement over a property. They may be something you don’t particularly need or want anyway.
Don’t tack on the costs of giveaways to the price of your home, though; most buyers will resent it. In fact, a buyer may ask for price concessions equal to the cost of the gift. It’s to your advantage to negotiate, because the point of a bonus is mainly to attract a buyer who will make an offer for your home. Then you can negotiate how much you will discount the price of the home if the buyer doesn’t want the gift after all. Your goal is to attract the buyer first, then work out the details later.
