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In up markets and down, there are always motivated sellers — those who want a quick or painless close, or just want to move the home. Incentives are common in buyers’ markets to make a seller’s home more desirable than their competition, but sellers also have to get creative in slower times of the year or in parts of town where homes don’t move quickly.

If you have a home to sell, and you think it might be a tough sale, consider offering buyers something to sweeten the pie. Here are a few ideas you might not have considered. You can either offer these out of the gate and advertise them as incentives, or keep them in your back pocket to use as a negotiation tool.

Buy down their interest rate

Most home buyers today need a mortgage to make a purchase. Banks typically offer buyers an interest rate based on the market at the time they apply. If they want to lock in an even lower rate, buyers can always pay an upfront fee, called a point. Paying upfront is called “buying down the rate,” and sellers can do it for the buyer.

If a bank offers a buyer three percent today on a 30-year fixed mortgage, the buyer (or seller) can pay one percent of the loan amount to get something like 2.75 percent. For buyers, this means lower monthly payments locked in for many years, which is more valuable than a small reduction in the purchase price.

And the savings from, say, a five-percent price reduction built into a loan and amortized over 30 years won’t come close to matching the monthly savings that buying down the rate will accomplish.

Include furniture or window coverings

Buying furniture and some finishes post-closing can be a huge hidden or soft cost to real estate. Owners who have renovated their home often chose furniture that matches the home’s new look. Some homes show so well, buyers might want to purchase the house and all the furniture in it.

If you have a home with custom furniture that might not fit so well in your new home, you might consider offering the furniture with the sale. In addition to helping sell the home, it might alleviate the future headache of trying to get rid of the furniture.

Credit for non-recurring closing costs

Buyers often come back to the seller after inspections and request repairs to the home. The wish list can include anything from patching roofing to replacing windows and repairing dry rot.

Most sellers don’t want the hassle of repairing these items. If not done right or to the buyers’ specifications, the repairs can hold up the closing — or even haunt everyone post-closing.

One way to incentivize buyers to continue with the purchase is simply to offer them a credit for non-recurring closing costs. This credit goes to the buyer as cash in their pockets at the closing.

Many buyers ask for credits and may not do the repairs for months. It’s better to give them cash and let them do as they see fit with it.

Offer buyers’ brokers higher commission

Listing agents often market their properties to other agents who have buyers. While a good buyers’ agent should advocate for all homes for their buyer, no matter the commission, sometimes a bonus brings some necessary awareness to a stale property.

It’s not uncommon for a seller to offer a half-percent or even one-percent bonus commission to the buyers’ agent for a property that won’t move. Agents make these offerings by interoffice communication and word of mouth in the community. (Don’t forget, a good agent is well connected and keeps tabs on what’s happening in the market.)

Credit for “Close By” date

A motivated seller might have a variety of reasons for wanting a quick closing, such as tax purposes or a deadline for a job transfer. Sometimes the consequences of the sale date justify offering a small bonus or credit to a potential buyer for meeting a closing date.

For example, a seller may have claimed residence in another state, and faces a giant tax bill if they don’t sell by a certain deadline. The tax liability may have larger consequences outside the real estate transaction.

If a seller wants a quick closing, they should offer a credit to the buyer — and maybe even a bonus commission to the buyers’ agent. For a buyer who rents and can be flexible, a quick closing is simple. Offering an incentive to do so would only be icing on the cake.

Sellers can offer incentives and promote them in a number of ways — some more strategic than others. Putting incentives out there as part of your marketing will surely get buyers in the door. So if you’re having a hard time selling or know up front that your home will be a tough sell, advertise the incentives implicitly. If you have a buyer, and you’ve come close to negotiating but are stuck, these incentives, pulled out at the eleventh hour, can help move the deal over the finish line.

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If you’re trying to buy a home for your growing family but find that the pickings are slim, now you’ve got someone to blame: baby boomers. The Washington Post recently blasted this age group for clogging up the real estate pipeline. Apparently, experts say they should be downsizing into smaller homes now that their kids have flown the coop—but these empty nesters just aren’t budging.  “They appear to be staying in the family home longer than previous generations,” Sean Becketti, chief economist of Freddie Mac, told the Post. And this, he says, has created an “imbalance between housing demand and supply.”

Homeowners are less and less pushed to sell by market conditions, according to Seattle-based brokerage firm Redfin.
In an October survey, the company found that 16% of sellers considered the prospect of rising interest rates as one of three major incentives to sell their homes. This contrasts with 59% of respondents surveyed last year.  Instead, 29% of sellers said their top motivations included the desire to move to a larger home, while 27% cited relocating to a new city and 21% cited an aim to downsize. Nevertheless, when asked for their concerns about selling, the general economic environment was a top deterrent, mentioned by 32% of homeowners surveyed.

"Seller optimism is flying high right now," said Redfin chief economist Nela Richardson in a Nov. 12 press release. "But buyers are more grounded now and pricing a home too high is risky. More sellers are having to drop their initial asking price this fall than a year ago."

In this context, 20% of the 730 home sellers surveyed between Oct. 18 and Oct. 20 listed cashing in on the value of their home as a major reason to sell.

Mortgage interest is a double-edged sword. On one hand, it’s a tax-deductible expense, but it is also, by and large, the heaviest cost of homeownership.

Of course, deciphering how much interest you have left to pay off on a mortgage can be tricky. Here are a few quirks to be aware of if you’re looking to buy or refinance a home.

1. Interest works the opposite of rent

The amount of money you’re borrowing is based on a certain interest rate paid over the term of your loan. The longer the term the more interest you pay, spread out over the life of the loan. A shorter-term loan is more condensed with a higher payment each month, but less total interest paid overall.

Like rent, loan interest is paid in months. When you start paying your 30-year mortgage, for example, part of your monthly payment will go to principal, but the lion’s share goes to interest. It is not until year 10 that the inverse occurs and more of the payment starts going to principal. The majority of the principal will then be paid off during the remaining 20-year term left on the original 30-year loan.

Rent is due on the first of the month for that month’s obligation. Mortgage interest works in arrears. When you make your mortgage payment at the beginning of the month, you are paying the interest of the previous month.

Remember, a good credit score entitles you to better rates on your mortgage, so it may be a good idea to check yours before you apply for the loan. You can see your credit reports for free each year at AnnualCreditReport.com and your credit scores for free each month at Credit.com.

2. Refinancing is more complicated than you think

Keep in mind that when you refinance, your principal balance on a credit report or mortgage statement is not a payoff amount. The payoff is always higher than the current principal. That’s because the lender must estimate the amount of interest they need to collect before the loan term is up. The simple way to estimate a payoff when you refinance your home is to add a mortgage payment to your current principal. While this is not an exact calculation, it is a safe budgeting estimate when determining what you want your new loan amount will be.

Most mortgage lenders are nimble enough to tie your recent loan payment to your payoff amount. This is also a way to make your numbers lower at loan settlement (escrow closing). But if your loan is closing just after the first of the month and you’ve already made your mortgage payment, the payment could be refunded to you after closing or put toward the payoff amount.

Refinancing your home does not mean skipping a mortgage payment. Let’s say you close your loan on Oct. 15: Your new lender would begin charging you interest from the date that it finances onward. This means you begin incurring interest from Oct. 15 through Nov. 1 with your first payment on the new loan not due until Dec. 1. While you do not make a payment in the first month after refinancing, you are still paying for it in interest as part of the next month’s payment.

3. You prepay a month’s interest when you close on a home

The same interest concept applies when you close on a new home purchase. Your loan estimate will show the amount of prepaid interest your lender is using to estimate the amount of time it will take to close on your new loan. The prepaid interest amount can be adjusted based upon your closing date.

Referencing our October loan closing examples: If your loan closes just after the first of the month (say Oct. 5), you won’t have to make a mortgage payment until Dec. 1. All of the interest for November will be reflected in the Dec. 1 payment, and the interest for October will be collected at closing in the form of prepaid interest.

Interest is a driver of cash-to-close and is a recurring cost, meaning it’s an ongoing expense of homeownership, just like property taxes and insurance. The more informed you are as a mortgage borrower, the smarter choices you can make when applying for a home loan. Remember, if something does not make sense with the origination of your loan, ask your loan professional. He or she should be able to clearly explain any and all related mortgage interest questions.