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Bryan Normal
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Incentives for Buyers

Bryan Normal
Posted

I am a house flipper but I think this pertains just as much to broader RE agent strategy in general...Wondering what strategies agents and investors are using to get houses under contract faster in a declining house market. My local market was very resilient until about April of this year, and it is clear now at least locally we are in a housing freeze at best and the beginning of a longer term housing recession at worst. Strategies we've employed so far that we did not previously when the market was good: offering a home warranty, pricing the house slightly below perceived market value, added perks like new washer and dryer, and my least favorite strategy, house staging. None of these really seem to have made the houses more attractive to buyers.

My new idea is to stop doing the staging and home warranty offer, and instead offer a mortgage rate buydown instead. Maybe temporary 1% buydown, which for a $300K house would be like $2500 a year (1-0 buydown). That's essentially the same as what I spend on staging and the home warranty which don't definitively seem to be moving the needle in buyer's decision making. A 1-1 buydown (1% 1st year, 1% 2nd year) would be about $4600, and 2-1 buydown would be about $6800.

The buyers in my market seem very finicky and tentative, and heavily financially motivated. They ask for monetary concessions up front before even doing inspections, and then usually again after inspections (bold new phenomenon). I've never had anyone mention how nice the staging or washer/ dryer or home warranty were to have as part of the deal... Thinking if they're so well versed on affordability, maybe the buydown is a better carrot than my other tactics?

Anyone who has tried this, or maybe has a different creative idea to help attract showings and get offers going and sell faster than the market average, I'm all ears. It's a difficult time out there.

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Kerry Noble Jr
  • Investor
  • Indianapolis, IN
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Kerry Noble Jr
  • Investor
  • Indianapolis, IN
Replied

If I was a agent I would be getting clients to look at Fixer uppers and get them financed with 203Ks so they could walk into some type of equity. 

So as an agent i would be good with people providing off market deals. 

then I would become a gc to flip the house for them and make money off the rehab. 

just a strategy i was thinking in my head.

  • Kerry Noble Jr
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