Trying to Sell Your Home? Offer Seller Concessions

Aug 17, 2007, 1:12 pm PDT
News provided by Quicken Loans
Lowering the asking price on your home isn't the solution to making it stand out in today's crowded housing market. Right now there is nearly a nine-month supply of homes for sale, according to the National Association of Realtors.
How will you make your home stand out among all those other 'For Sale' signs?
The experts say that instead of slashing your asking price, a unique way to attract more offers is to propose lowering the rate on a potential buyer's mortgage by providing seller financing incentives.
Consider this example showing the difference in cost and savings for lowering a home's price vs. offering seller concessions. In the case of lowering price, a motivated seller might reduce their $300,000 asking price by 5% or $15,000. For less money, the seller could pay up to three discount points on the buyer's mortgage, lowering the buyer's interest rate and monthly mortgage payment. A discount point is considered 1/100 of the buyer's loan amount - about $3,000 per point in this example.
The math is simple. Seller concessions cost the seller $9,000 in this example (vs. $15,000 to lower the price of the home) and the deal is actually more enticing for the buyer. At today's 30-year fixed rate, three points off a mortgage rate can potentially save a buyer more than $32,000 in mortgage payments over the life of the loan! And, points paid through seller concessions may even be tax deductible.
Bob Walters, chief economist of Quicken Loans, says seller financing incentives offers a win for both seller and buyer.
"By offering a concession to lower the interest rate, the seller makes their home more affordable, without dropping their price. This gets them to the closing table sooner. The buyer actually may save more in reduced interest over the life of the loan than they would have via a lower home price, depending on the rate and terms of their mortgage."
Other examples of seller concessions that buyers can offer, according to Walters, include paying some or all of the buyer's closing costs, and providing an allowance for the buyer to landscape or make improvements to the home.
Seller concessions can be an inexpensive and innovative way to move a house in a slow market. Both the buyer and seller may benefit from seller concessions. If you're interested, most real estate or mortgage professionals can offer assistance in setting up seller concession's properly for maximum benefit to both parties.