Alright…so in a down market everyone in the real estate industry turns into a creative marketing machine. Volume down, guard up, value added service in check, and creative marketing implementation on lock! So…what are incentives and how do they affect buyers, sellers, and home sales? Incentives are the way in which some agents are electing to get their listings noticed, some sellers are offering to entice scarce buyers, and buyers are reaping the benefits due to all of the above…
Point blank, incentives are enticements for 1 property to be chosen over another. The examples are endless: Closing Costs Paid, Furniture Provided, Discount Points Bought, Landscaping Packages, Outside Living Area Upgrades, Appliance Upgrades…the sky is the limit and the offers can get as benign or as outlandish as you can imagine.
The best incentives seem to be those attached to dollar signs for many buyers. They wanna know how much they can save, how much they can have, and what they can do with it… Buying real estate at this point can be as lucrative as a full-time job if you do it right! Obama’s gonna give ya $8k if you’ve never done it before, your closing costs can be paid which could be as much as 4.5% of the purchase price, you can go from LG to Kenmore Professional Series at no cost to you, and hell- How bout a plasma to mount over the fireplace?
The downside to incentives is that sometimes, appropriating that money to be a reduction in list price coulda been much more effective in luring buyers to the property when the listings are plentiful and the buyers are scarce. Aesthetics are key in this theory as well. A lower priced home with proper staging can lure a buyer just as effectively as a home with tons of freebies and enticements…
So, the money for the incentives might keep a listing at the bottom of the price pond, where it can be overlooked by those skimming the surface of the pond.
I’ve never had a buyer that bought a house just because they were gonna get a plasma tv thrown in…I have had many buyers buy homes that they thought were gonna build equity quickly and were great deals…and yes, I’ve even had buyers who wrote offers on the great deals and asked for the plasma to be thrown into the mix…lol. I suppose at this point in the game, the thing to bear in mind is that each and every real estate transaction will have an enticement afforded- aesthetic, monetary, geographic…but incentives can sweeten the pot. The question is, what is more effective for agents- Fire sales or incentives? What is more lucrative for buyers- lower prices or incentives? And what makes seller’s feel more enticing- bottom line pricing or built-in incentives that require higher pricing? I need a creative marketing consensus…
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