Fighting The Housing Market Crash With Seller Concessions
In the years prior to the market beginning to slow down, the sale of your home could only be ensured by putting it up for sale on the market. Quite frankly, many markets were running actively with hot bidding wars that would often incite prices that were much higher than the asking price. Low interest rates existing at that time provided the encouragement for buyers to become engaged in the acquisition of properties at what could be considered a historic rate. Many investors, therefore, could now double their investment within a very brief period.
This real estate hype, as predicted by many, did not last for long and it is now being forecasted that the 2008 market will be a lot tougher than the previous two years. Markets that were once considered to be the hottest took a sharp decline and made the investors, as well as the homeowners, quite puzzled as they can no longer figure out how to ensure property sales while the market continues to overflow with offers and the loan underwriting guidelines become more strict.
The market may return to its previous state but this will take a considerable amount of time. If you are unable to wait out this period and are in dire need of selling your property, creative marketing strategies may be of great help.
You must realize the simple fact that current market situations exist because of a huge number of offers which allow for choices. Just a few years prior, buyers felt pressured to act quickly when seeking a property. Options were limited and the most attractive offers were quite likely to be bought almost immediately after being put on the market. Today the scenario is totally different. The number of properties offered is significantly larger and the prices have seen a great decrease, such that buyers now realize that they have an advantage over the sellers and can now take as much time as they need in searching and selecting the right properties. Therefore, in order to gain a competitive edge over other sellers in the market, you must apply certain strategies that will make your offer out perform others and attract more buyers.
Looking a few years back when the market was stable, sellers did not need to give concessions. However, in current markets where the competition is fierce and offers are ample, seller concessions are being used frequently. Quite simply, a seller concession can be any additional advantage given to the buyer and the nature of concessions will vary with the market. For instance: a decoration fee may be offered in case your carpet is too old, or some contribution could be made toward the closing costs to help attract first-time buyers to give your property greater consideration.
In earlier years, these kinds of concessions would not be proposed until sellers and buyers were already engaged in negotiations. Even then, such offers would still not be made until the inspection was complete and something was found that needed to be compensated for. This does not, however, mean that such concessions cannot be proposed to buyers while the property is being placed on the market. It may actually give your property and additional advantage to attract potential buyers.
It is important to understand that power in the market has shifted significantly; giving buyers the advantage and sellers must now work very hard to get their attention. If you already applied some specific strategies to sell your properties, such as aggressive pricing, then you can try making concessions to increase buyer interest.
A useful option is to pay buyer points which will create a win-win situation. For instance, if you have priced your property at $150,000 and then offered a 3% discount, you will have slashed $4,500 off of the price. This amount can then be utilized to buy mortgage points for your buyer. You may even be able to purchase a significant amount of mortgage points for even less money. This simple tactic will give your buyer the ability to acquire a lower interest mortgage and by extension lower their monthly payments. This can make your offer more attractive and reasonably priced than similar properties and may increase your chances for a quick sale.