Price Reduction vs. Buyer Incentive: Which Actually Gets Your Home Sold?
Price Reduction vs. Buyer Incentive: Which Actually Gets Your Home Sold?
Price Reduction vs. Buyer Incentive: Which Actually Gets Your Home Sold?
OPTION 2: Offer the Buyer a Concession
Price Reduction vs. Buyer Incentive: Which Actually Gets Your Home Sold?
Your house isn't selling and you're willing to give up $10,000 to get
a deal done.
Here's my question:
Where should we put the $10,000?
Do we reduce the price?
Offer the buyer $10,000 toward allowable closing costs?
Could their lender use some of it toward their interest rate?
Or does some combination make more sense?
That's a much better conversation than automatically reducing the price.
Because if you're giving up $10,000 either way, I want that $10,000
working as hard as possible.
OPTION 1: Reduce the Price
Let's say your home is listed at $600,000.
We reduce it to $590,000.
That could be exactly the right move if the price is keeping buyers
from considering the house.
It might put us into a different search range. It may make us more
competitive against nearby listings. And if we're clearly overpriced,
correcting the price matters.
But here's what sellers sometimes miss:
A $10,000 reduction in purchase price doesn't mean the buyer's monthly
payment drops by $10,000.
The buyer is financing that price over many years.
So before I automatically give away $10,000 in price, I want to know
what else that same money could accomplish.
OPTION 2: Offer the Buyer a Concession
What if we kept the price where it is and offered up to $10,000 toward
the buyer's allowable costs?
Depending on their loan program and lender, that money might
potentially help with eligible closing costs, prepaid expenses,
discount points or a rate buydown.
Now we have a different financial conversation.
Maybe the buyer has enough income for the house but doesn't want to
drain another $10,000 from savings at closing.
Maybe their bigger issue is the monthly payment.
Maybe their lender can show them a financing option where seller
concessions have a greater impact on their situation than a $10,000
price reduction.
That's why I want the lender involved.
I negotiate the real estate.
The lender needs to show us exactly what the financing options do.
Same Seller Cost. Different Buyer Impact.
This is the part I want sellers to understand.
If you're willing to give up $10,000 to make the transaction happen,
we shouldn't assume there's only one way to do it.
The buyer may value a lower purchase price.
They may value keeping more cash in the bank.
They may care more about reducing their monthly payment.
And what we can do depends on their loan program, lender requirements,
appraisal and the terms of the deal.
What problem are we trying to solve?
This Matters Even More When We're Competing With Builders
Resale sellers also need to pay attention to new construction.
A builder may be advertising financing or closing-cost incentives that
make the monthly numbers attractive to a buyer.
You may not be able to match the builder's financing program.
But your resale home may already have the backyard, landscaping,
window coverings, pool or upgrades that the buyer would have to pay
for after buying new.
We need to compare the whole deal, not one flashy incentive.
Jill’s Insider Tip
If you're considering a $10,000 price reduction, don't make the change
until we ask:
Could that same $10,000 be more valuable somewhere else in the transaction?
If we have an interested buyer, I'll work with their agent and lender
to understand what could help.
If we don't have interested buyers because we're priced too high?
Then we may have our answer.
Price and financing solve different problems.
Jill’s Final Take
I'm not against price reductions.
I'm against reducing the price without knowing what we're trying to accomplish.
If price is keeping buyers away, let's fix the price.
If buyers like the house but the financial side is stopping them,
let's look at whether an incentive could help.
And sometimes the smartest deal uses a little of both.
I'm looking at the whole deal.
Because if you're willing to give up $10,000 to sell your house, I
want to know we're putting that $10,000 where it has the best chance
of getting you to closing.
Wondering Which Makes Sense for Your House?
If your East Valley home is sitting and you're considering a price
reduction, send me the address before you start cutting the price.
I'll look at the competition, buyer activity and where you're positioned.
Then we'll figure out what the sale needs to accomplish for you.
602-513-6209
JillHamilton.com
Jill Hamilton, REALTOR®
Buy Sell With Jill | West USA Realty
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