Trading Spaces, pt. 2

On Monday, we discussed an incentive that builders rarely used in the past, but are employing more and more: the trade-in. It is something like when you really want or need a new car and are willing to hand it over to the dealer for a low price.

Trading in or selling your home to a builder in exchange for a new one is a deal that is sealed at a simultaneous closing." So you sign papers to sell the builder your old home and sign papers to buy a new one from them at the same time.

As with any real estate deal, you should do your homework and work with a competent real estate professional if you want to trade in your home. Be certain that the price being offered as part of the trade is something you can live with. Make sure you know what your home is truly worth on the market and be wary if they offer to take it off of your hands for a price that is extremely low. If the builder wants you to use a certain financial institution, check out the costs of the loan and look for any hidden fees.

Trading Spaces, pt. 1

For anyone who is contemplating a new home purchase, the thought to having to carry two mortgages at once is quite daunting. This is why some builders are offering to let home buyers trade-in their former homes. Builders realize that although you may be in a position to buy the home they've recently built, you may be not be able to do so if you cannot sell your current home in this market.

Most often, a builder will agree to buy your home for a specified price once you close on a home they've built or sign a contract to have them build you a new home.

You should know that trade-in incentives for home sales aren't standard practice. But in these uneasy economic times, people are getting very creative.

You should also know that when you agree to let a builder buy your home, the price you'll have to agree to may be less than ideal. At the same time, some buyers are willing to take the guarantee of a (most likely) lower price if they have spent or foresee spending months being unable to sell their home.

Home Selling Basics

On Monday, I talked about how a home sale is a business transaction. In light of some recent news stories about people attempting to sell their home and relationships at the same time, it is time to remember some home selling basics. Remember, nothing can beat a well-maintained home that is groomed for sale. Here are some other tips:

Price your home to sell
Making sure that your home is priced competitively is very important. If it is priced very differently from similar homes, buyers will be wary. You want the price to be worthy of the home and its amenities, but also in the range of the other homes in the neighborhood.

Try traditional incentives
Stick with incentives that are a part of the real estate negotiation. These include: paying some of the buyer's closing costs, an allowance for certain repairs, including major appliances in the deal.

Make the most of marketing
Use both traditional and more innovative techniques to market you home. Have an open house and make your home available for viewing. Work with your real estate agent on a personal web page.

Remember that a Home Sale is a Busines Transaction

Last month, a woman in Florida was in the news because she decided to put both her house and her heart up for sale as a package deal.

The woman is willing to sell her almost 2000 square foot home along with her hand in marriage. She was having trouble on the dating scene and anticipated trouble with selling her home in the current housing market.

A man in Australia has also made the news because he decided to sell his entire life, including his house, vehicles and introductions to his friends.

A while back, I wrote about some other unusual home selling incentives and it seems that these incentives are getting quirkier and quirkier.Selling a house is a business transaction. Yes, there is an emotional side to it, but it is best to remain professional.

With the expert advice of a good real estate agent, you should be able to sell your home, without offering friendship or romance along with it. If you are having trouble selling your home, feel free to contact John Day at: john.day@longandfoster.com.

Incentives for Home Buyers

Sitting in a restaurant the other day, I overheard a conversation about a home sale. One of the people involved was telling her companion about how they had decided to offer to pay a buyer’s rent for a few months to seal the deal. It seems that the buyer wanted to move in before she would be able to move out, so they reached a compromise. This way she did not have to leave before her new home was ready and the buyer got the home he/she wanted, albeit a little bit later than they’d hoped.

If you were not aware of this option, consider it. A while back, I wrote about some unusual homeselling incentives. Some of those methods were a little outlandish. But offering to take care of a few month’s rent for a buyer is not unheard of at all. Don’t let something like a move-in date keep you from selling your home. This is not the type of thing that should have you and a buyer walking away from the table.

An experience real estate agent can help you sort out these kinds of agreements. If you have questions about buyer incentives, call me and my team at 410-507-2909 or e-mail me at john.day@longandfoster.com.

Unusual Homeselling Incentives

Pay a $100 essay contest entry fee…but no mortgage…

Buy one home and inherit the owners' retirement home…

Membership to a golf club…

A car…

What are these?

These are some of the "creative" ways in which homeowners are attempting to sell their homes.

After seeing her home sit on the market for three summers, one woman decided to give it away to the winner of an essay contest. She wants to use the $100 contest entry fees to pay off her mortgage and closing costs. (So far 500 people have entered and she is hoping for more to be able to cover costs.)

A couple thought to sell their home and will their retirement home to buyers willing to care for them in their old age. The home was sold, but the buyers did not take on the bonus of the retirement home in exchange for caring for the sellers in their golden years.

Other sellers have tried more conventional incentives, like cars and other material goods as a way to sell their homes.

Added incentives, above a market-based price and a well-cared-for home, can sell a property, but I would caution sellers before they take such extreme measures.

Sellers Use Incentives to Lure Buyers

Buyers are in the driver's seat in today's housing market. New home builders are offering some pretty incredible incentives, including $15,000 in new furniture, season tickets to college football games, luxury bath spas, plasma TVs, even yearlong golf memberships in exclusive clubs. Builders say the glitzy offers are getting more people in the door, but it's the financial incentives that close the deal. Builders might offer to buy out a renter's lease or pay a home or condo owner's mortgage payments for 6 months. Some are offering to reduce purchase prices by $30,000 to $40,000 or provide up to $50,000 worth of free options and upgrades.

Obviously, you can't expect an individual home seller to offer incentives on the same scale as big-budget builders, but you can ask him to sweeten the deal before you sign your name on the dotted line, says veteran realtor John Day in his informative May newsletter. (Click the post title to read John's article, Should You Buy in THIS Market?) If you're buying a pre-owned home, it's reasonable to expect the following incentives, advises John.

• If you're putting down 10% or more, you can ask for up to 6% of the purchase price in incentives. While these incentives can't be cash rebates or be applied to your down payment, you can ask the seller to pay your closing costs or buy down your interest rate.
• If you're putting down 5% or less, you can ask for 3% of the purchase price in incentives. Incentive limits are keyed to lending standards that prevent mortgage fraud.

Talk to experienced realtor John Day. He can explain what incentives are being offered in the area where you're buying or selling a home. John can recommend a lender who can discuss your particular circumstances and the incentives that might be available to you. Read John's monthly newsletter for practical advice on buying and selling homes. In it you'll always find interesting articles and easy to understand charts that track trends in the housing and mortgage markets. For additional information on buying and selling a home, visit John Day's website. If you're buying or selling a home in Maryland or the greater Washington DC metro area, John Day is your key to success.