The best incentive is a good price.

So here’s the deal. We are up to 1313 residential listings available in the twelve communities listed in the Lakes Region of New Hampshire. That’s up over 100 listings from last month and over 400 from March. Based on the last 12 months sales in the same towns we are looking at 21 months worth of inventory! Great for buyers. Not good for sellers, particularly if you need to sell and sell soon. So what do you do?

Some sellers are offering buyer incentives as a marketing strategy to try and get the attention of the limited number of buyers that are out there. Incentives have been used for a while particularly by some of the larger new home builders. They offer programs like paying for the buyer’s closing costs, paying down mortgage rates, or for upgrading properties under construction. This practice has found its way to the resale market as some anxious sellers have offered vacation packages, cars, boats, or cash incentives as a way to make their property stand out from the rest. Other common incentives include the buyer offering to pay association or condo dues for the buyer for a year or two or free heating fuel for a year (with the prices today that will probably cease). One seller in Hampton last year offered to pay two years worth of taxes on a $1.2 million home or to buy down the buyers’ mortgage rate to the tune of $36,000 if he got an “acceptable offer”. And while the home did sell which was the goal, it sold only for $1.085 million and the seller still gave the incentive.

Sellers also sometimes offer limited-time bonuses to any agent that will bring them a buyer. Usually the more expensive the home is, the larger the bonus.  Despite what some seller’s think, REALTORS® aren’t magicians that can make a buyer appear out of thin air. However, one agent in our office received a $25,000 bonus for bringing a buyer to a multi million dollar home last year. That was great for the agent as things have certainly been tough for real estate professionals for the past couple of years.  But the agent was going to show the property to his buyer anyway as it fit the buyer’s criteria.

So do these types of incentives work? Sometimes, it might catch someone’s attention. Offering to pay for the buyer’s closing costs could catch the attention of a first time buyer. But buyers aren’t bashful in this market. If they need the seller pay closing costs, they ask for it anyway. And offering large incentives will signal a buyer that the asking price is likely inflated to cover the cost of the incentive. Without a doubt, the best incentive to a potential buyer is a better sales price.

Residential Homes Available as of August 1, 2008

Report covers the towns of Aton, Barnstead, Belmont, Center Harbor, Gilford, Gilmanton, Laconia, Meredith, Moultonborough, New Hampton, Sanbornton, and Tilton

This entry was posted on Tuesday, August 12th, 2008 at 1:36 pm and is filed under Lakes Region Home, Market Report Posts. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.