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Incentives to buy home

Posted by debi_2006 (My Page) on
Wed, Jun 22, 11 at 14:00

First time poster on this forum.

My 75 YO mother is selling her row home to hopefully move into a small 55+ community. She has never owned or bought a home before - ever (this one was her deceased husbands). She owns her current home outright and it's for sale at $95K. The other home is a one floor, 2 BR, 2 bath condo at $175. She will put down $100K toward the new place of which whatever she gets from the house sale will be the down payment, naturally, plus more.

Because her row home is difficult to sell due to being an undesirable town, with low-income residence ($30-$30/annually), and neighborhood getting worse, the agent is feels she should offer a one-year home warranty ($450 at closing) good for HVAC, hot water heater, appliances, etc., as an incentive; a $2K cosmetic incentive (the house could use a kitchen remodel, but is quite livable as is, otherwise everything else is good including roof, windows); and a seller's assist of unknown percentage, but guessing it will come in around 6%. This home is located about 20 mins. from Philly airport, just so you know.

Are these incentives the "norm" today? She just paid $2300 to get her basement looking livable which was worth it.

Background: she needs to move to a one-floor place with elevator due to bad back and while she is in fairly good health, it will be easier for her to take care of as she ages.

It's been a long time since I bought a home and know the market has changed drastically in recent years, but are sellers offering this, that, and the other thing just to get a buyer? I hope this doesn't come across as a dumb question, but rather more curious.

Follow-Up Postings:

RE: Incentives to buy home

Offering a home warrantly, closing costs are very common in the current market. The $2k cosmetic incentive might also be a good idea if the place is really dated.

RE: Incentives to buy home

Why not just price it accordingly, and forget the incentives?
I advise my clients to never give a HOW up front before anyone asks for it. If and when they do ask for it, you have some leverage to ask for something in return.
No buyer is going to make the decision of whether or not to purchase a home just because you do or do not offer a HOW up front.

RE: Incentives to buy home

i would drop the asking price by $2k versus the incentive. it gets more buyers that might pass on it based on asking price because they didn't read the fine print.

warrantee is nice to offer.

RE: Incentives to buy home

"warrantee is nice to offer"

Yeah, unless you've had one, then you know they're not worth the paper they're printed on - I'd rather have $2k off the price. A warranty is good for attracting first time buyers, are they your target?

RE: Incentives to buy home

Yes, these are definitely first time buyer type homes. She already dropped the price by $4,500 from it's original price. My guess is that anyone buying a house these days doesn't offer the list price so that's why she doesn't want to drop the price again - it leaves her no "play room" should it come to that. It's been on the market since last September, but the agent was HORRIBLE (I won't go into detail). She has since changed realtors in the last 3 weeks and he seems quite aggressive and knows the area well (unlike the first realtor). He is "known" as the top seller in her area.

Thanks for your replies.

RE: Incentives to buy home

Price is the most important thing to me than things like home warranties. Clean it up the best you can, and price it aggressively. If the kitchen is outdated, price it for having an outdated kitchen. In a bad neighborhood around Philly, your buyers are going to probably be lower income and so I would think the price would be their first concern too. And if you say the neighborhood is getting worse and prices are still dropping everywhere I hear, price it to SELL.

RE: Incentives to buy home

The incentives can be helpful for first time buyers who may not have the cash for costly repairs and updating after they move in.

RE: Incentives to buy home

I would go with the lower price instead of incentives.

I know you did not ask about it, but I want to ask your mom think twice about sinking her money into buying a place to live. I am making the assumption that the money she is putting down on the condo is all or most of her cash reserves, and I know that this may not be true. If it is, though, are there any nice senior communities with rentals? I am not sure I would buy in this market at all. You mom might need the cash for other expenses to keep her comfortable and at home if she has any serious medical problems down the line. My DF-in-law found that his good monthly income and his savings kept him at home with us when he needed caregivers during our work hours late in his life. Your mom could need help at home for big chores or personal care in the future, and it is so much more comfortable to get it at home rather than needing to move to a facility.

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