How to sweeten your terms to sell faster
You’ve put the house in fine condition. You’ve set a competitive price and are flexible about it. Is there anything else you can do to speed things up? Offer terms that will help move or close a contract. We often call these terms “sweeteners” because of their attractiveness to both buyers and sellers. Buyer and seller may negotiate details, but the strategy to select the best terms is in the seller’s control.
Not all properties, of course, nor all sellers or neighborhoods, require sweeteners- and very few would need to use every strategy. Smart sellers understand their most effective options, and then after all terms are considered, select the strategies that suit their circumstances. As a seller, you may want to pick some-or none-from this sampler of sweeteners.
Loan Strategies. Help the buyer reduce monthly payments, which may be the stumbling block for the person who wants you home. Settlement sweeteners are options designed to help reduce buyers’ out-of-pocket costs such as downpayment and closing costs, so they can swing the purchase. Accommodations are small favors you can grant to overcome logistic obstacles.
Buyers usually are not as concerned with price as they are with their monthly payment. If you can find a way to reduce monthly payments, you have the best chance of getting your top sales price. We can work together to find a strategy that helps both you and the buyer achieve your goals.
· Buydown. Consider buying down the initial interest rate of the serious purchaser so he or she can qualify for a loan. One of the many available buy-down plans might help your buyer and still let you come out with net proceeds you want.
· Assumption. If you have an assumable loan with a below-market interest rate, consider making it available to a solid purchaser. Check your lenders assumption requirements.
· Take Back. You might even be in a position to offer the buyer a second mortgage by taking back some of the purchase price in a note.
· Seller Financing. If you don’t need immediate cash and you home is free and clear, you could think about holding the first mortgage, especially when interest rates are very high and this is an opportunity to invest your proceeds at above-market rates. Be sure the buyer is able to carry monthly payments and housing costs.
· Lease/Purchase. Another option, if you don’t need your funds immediately, is to let the buyer rent with a delayed settlement, provided you are sure the purchaser will eventually qualify for the loan. Part of the rental could apply toward the downpayment, if the buyer is short of cash.
· FHA/VA. If the purchaser has sufficient income to qualify for a loan, but is short of cash, consider accepting low-downpayment-financing like FHA or VA (even though you will have to pay some points). If you pay points, you might expect a sales price at the top of your pre-determined price range. When the seller pays points, the buyer pays less cash at settlement and is able to finance the agreed-upon sales price.
· Closing Costs. You could offer, instead, to pay part of the closing costs (title search, attorney’s services, appraisal, recording, etc.) that the purchaser would ordinarily pay. In exchange the buyer may agree to pay the discount points, some of which will be tax-deductible to the buyer in the year of the purchase.
· Furnishings. Include with purchase price household furnishings the buyer would have to buy later, such as the children’s outgrown swing and sandbox, the tractor-mower you won’t need, the draperies tailored to specific windows. This may be treated as a separate addendum.
· Occupancy. Work out pre-occupancy or post-occupancy terms if occupancy is the only hang-up.
· Move Out. Consider occupying temporary living quarters for yourself, in order to let the buyer move in on schedule.
· Pre Inspection. In older homes, head off inspection contingencies by offering proof of recent home inspection, including roof & foundation inspection.
· Storage. Offer to assist in any reasonable way with the buyer’s problems in transferring household items (storing things in your garage, accepting delivery of appliances, for example).
· Services. Mention the availability of continuing services of lawn-care or house-cleaning people (by prearrangement).
Some of these selling strategies may seem excessive to you-if you have not previously aimed for a top-dollar sale. However, I have seen them pay off many times and have learned which strategies work best under what circumstances. If you would like to know more about using sweeteners-how they work, when and why to use one or more of them- give me a call.
If you’re thinking of selling, let’s talk. We can go over the state of today’s market, the competition from other homes in the area and your timetable for selling. If sweeteners seem appropriate in your situation, we’ll select some options you might consider. I look forward to your call.