Raise your asking price
One last concession strategy, in which sellers actually
raise the property price to help the buyer, may also
resurface as the market becomes more competitive. Here's
how it works:
Once you and the buyer settle on a purchase
price, you agree to raise the price of your home by,
say, 5 percent, and give that money back to the buyer
at the closing table. On a $250,000 home, that's $12,500
in the buyer's pocket -- enough to cover all or most
of the buyer's allowable closing costs. The buyer gets
a loan for $262,500 and, in essence, gets to cover the
closing costs through the mortgage.
Because of the higher purchase price,
the buyer will have to cough up slightly more for the
down payment and monthly mortgage payments, but it's
easier for many to absorb an extra $75 a month than
cough up a hefty lump sum at settlement.
Furhad Waquad, a long-time real estate
agent and president-elect of the Michigan Association
of Realtors, cautions such transactions can be risky.
"Most of the time it's a slippery slope,"
he says. "Sellers who say they'll give concessions back
to buyers and then raise the price of their house send
a message to buyers. The buyers just assume the house
was only worth the lower price to begin with and eventually
only agree to pay the original asking price."
Even when these deals do go through, he
says, sellers end up paying more for the real estate
commission and fees based on the higher home price,
including title insurance and recording fees. And, most
importantly, the bank must appraise the home for its
inflated sales price in order for the buyer to secure
"If there is a good dialogue between the
seller and agent, there should be no need for this type
of concession," Waquad says. "The house should be priced
fairly to begin with. In a softening market, you have
to package your product in the best way possible. Curb
appeal, cleanliness and lack of clutter are still things
I'd consider more than anything else."
While many sellers today, who have never
experienced a market where buyers called the shots,
may balk at the need for concessions at all, Walters
says it's important to remember that every month your
home doesn't sell is money out of your pocket. When
used correctly, he adds, such incentives can make the
difference between closing the deal and going back to
the buyer pool. And, by not lowering the price of your
home, you've given your neighbors a parting gift.
"Any time you lower your sales price,
you're establishing a lower value for the whole neighborhood,"
Walters says. "It's the lowest sales price that gets
used as a comparable to future sales. That's why I love