Will Offering Incentives Make a Difference in Getting My Home Sold?

Occasionally I see various types of incentives being offered in the MLS that are meant to increase showings and subsequently get a home sold.  So let’s talk about incentives.  What kinds of incentives can you offer – and do they work?  What are the pros and cons?

Agent Incentives - This is an incentive offered to the agent that is bringing a buyer to your home.   Here are some of the examples I have seen:

1. Bring a buyer and open escrow by ‘x’ and we’ll give you a bonus of $x. There are two things wrong with this type of offer.  One, offering a stipulated commission or bonus is usually against most MLS guidelines and two, I often see these bonuses being paid to an already discounted commission so that it merely serves to bring up the commission to a full rate.  Not that compelling.
2. Every time you show one of our listings (those of your listing agent) we’ll enter you in our drawing for ‘x’. Again, I’ve never found this compelling.  I’m trying to earn a living (not win prizes) by showing my clients homes that meet their needs.
3. Bring us a full price offer and we’ll give you a bonus of ‘x’. Not only do I not find this compelling, I find it offensive and a breach of my fiduciary duty to my client.  Incentives designed to make sure an a buyers agent is achieving a certain price for a seller, does not serve the buyer that is being represented.  Definitely an ethical and legal nightmare, but believe it or not, I see it fairly regularly in the MLS.

Clearly, I’m not a fan of agent incentives of any kind.  If the commission being offered is in line with the market, that’s incentive enough.  Remember, at the end of the day, the buyer is making the purchasing decision.  No agent incentive will impact a buyer’s decision in one of the largest purchases they will make.   The one exception may be when inventory is high and you discount a buyer’s brokerage fee so that the competition is more appealing.  If the choice to show your home or another lies in the hands of the agent, they may show the competition.   But again, that isn’t about incentive, that reflects the need to offer a competitive compensation rate and nothing more.

Buyer Incentives – This is an incentive offered to the buyer that is considering buying or viewing your home.  Sometimes offering these incentives are less expensive than a price reduction.  Here are some examples:

1. Seller will pay one year of the buyer’s Homeowner Association Dues. Depending on the cost of the dues, this can be meaningful to the buyer and a relatively small compromise to the seller.
2. Seller will pay for rate buy down of ‘x”. I like this offer a lot, but the downside is that many buyers don’t understand it, and unfortunately either do their agents in many cases.
3. Seller to pay for ‘$x’ towards buyer’s closing costs.
   

There are some things to remember when offering an incentive.  Ask yourself the following questions before offering an incentive to a buyer:

1. Am I certain that I’m am already priced right?  No incentive will sell an overpriced home.
2. Has there been any feedback about the home that I could address (paint colors, carpet condition, yard work)?  In some cases, you are better served addressing those matters first.

In a Nutshell

• Offer an incentive to the person that makes the buying decision – not the agent.
• Don’t attempt to offer an incentive if you are overpriced or have cosmetic issues you could address.  Offering an incentive only has the potential to help if everything else has been address first.

As always, if you are toying with an idea, feel free to bounce it off me without obligation.  I’m happy to help any time.

 

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Tagged as: Offering Incentives, tips for selling your home