real estate

Top 5 incentives for home sellers

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For owners who absolutely, positively must sell, and can't bear the thought of simply relinquishing the keys to the lender, here are some of the current incentives and strategies in use:

Toting the note: Offering buyers seller-financing "carry-back loans," which are essentially mortgages or loans financed by the seller, sometimes done in conjunction with "zero down payment" incentives. This can be risky. Sellers have found that it's to their advantage to partition this "carry back" into first and second lien-trust deeds. That prevents the new owner from obtaining additional financing that would weaken the home's equity position in the event the seller is forced to repossess the home. This works best of course if the home does not have an existing mortgage, many of which contain "due-on-sale" clauses, meaning the mortgage has to be paid in full if ownership is transferred. Many lenders, however, recently have been passing up their right to invoke the clause because they're happy that the payments are still being made. But this could be risky and you might try discussing it with the lender and seeking written approval.

Cash-back offers: These include offering to pay a year's worth of property taxes or even a year's worth of mortgage payments. Also increasingly common are "cash-back" offers that can be credited toward buyer down payments, repairs, landscaping, closing costs or mortgage points.

Glamour and glitz: Exotic vacations, timeshares, cars, season tickets for professional sports or even the opera, art, high-definition TVs, thousand-dollar gift cards for gasoline, all-appliances-included and even mineral rights (often worth $3,000 or more per quarter acre in some markets).

Lease-to-own options: This can be a motivator for tentative buyers who fear the market will drop further or for buyers who are short on down payments or who can't get traditional financing in tightening credit markets. Option structures differ greatly. A rent-to-own agreement, also called "lease-to-own" or "lease-purchase," is generally a binding agreement to buy a home at a set price at the end of a set period. It offers a little better security for the seller. A lease-option arrangement gives the renter a legal buy-option after a given period, but isn't an obligation.

"Mr. Big" of incentives -- proper pricing: "It's pretty simple," says William E. Brown, president of the California Association of Realtors. "A home is going to have to be priced correctly in relation to comparable sales as they exist today, not the 2004-2005 pricing that your neighbors got. Incentives and everything else take a back seat to this."

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