With the residential real estate market slowing, sellers are more frequently offering a variety of incentives to capture buyer interest. This eight-room, four-bedroom Colonial at 34 Gilbert Lane in Branford is currently listed for sale at $449,900 with a $10,000 “wish list” allowance for any buyer whose offer is accepted in the next 30 days. The property, which has 2,480 square feet of living space and a two-car garage, is being marketed by H. Pearce Real Estate Co.
In many parts of the country, the days of multiple offers and quick sales are over in the residential real estate market. Home sellers are finding their properties are staying on the market longer and that buyers, with more homes from which to choose, are being more selective. Sellers now are coming up with more creative ways to make their homes stand out, taking steps most Realtors say they have not seen in widespread use since the strong buyers’ market of the late 1980s and early 1990s.
“There are all kinds of things you can do to sell a house,” said Pat Diglio, the office leader of Prudential Connecticut Realty’s East Madison office. “People get more creative when the market gets a little more difficult.”
That marketing inventiveness is showing itself as home sellers are offering to pay closing costs for buyers, giving decorating allowances, making improvements like the installation of central air conditioning and offering other incentives.
The last time the market swung to favor buyers rather than sellers, home sellers and developers were throwing in all kinds of extras to make their homes more attractive. Diglio remembers a developer who, years ago, built a subdivision fairly far outside from major job centers. It was made up of starter homes, so the primary potential buyers were young couples, many of whom had only one car. Since that was the main downside to the homes, the builder bought a fleet of small Volkswagens and put one in every garage. It made a difference; many of the couples could not have afforded separate car payments, but when the price of the car was included in the mortgage, they could afford it.
These days, offers of paying closing costs are the most common incentives sellers offer, according to Nelly Odenwaelder, a senior vice president in H. Pearce Real Estate Co.’s New Haven office. Banks do not allow money to be credited to the mortgage for repairs, but they can allow sellers to pay closing costs up to a certain percentage of the mortgage amount, Odenwaelder said.
“I’ve seen a lot of this,” she said.
In the past, this tactic was mostly used for lower cost housing – buyers often could afford the mortgage payments, but the extra up-front costs of closing could make or break a deal. But these days, even sellers of high-end homes are paying closing costs for the buyer.
“Right now, buyers are in the driver’s seat,” Odenwaelder said.
‘Being Aggressive’
Sellers agreeing to pay for closing costs has been the most common incentive, but in the past few months, Odenwaelder has seem some other incentives offered, as well. She worked on a deal where the seller included most of the furniture in the house. That was a good deal; the seller was moving far away, so it made sense. Usually, though, she does not encourage home sellers to offer such incentives.
“It becomes sort of gimmicky,” she said. “It’s money [savings that attracts buyers], is the bottom line.”
Diglio also worked on a sale where the much of the house’s new furniture was thrown in to get the deal together. The home, an older Colonial, had been sitting on the market for some time, until the owner decided to part with the furniture.
Prudential Connecticut is listing another property with a land lease, and it has not sold, so the seller just offered to pay a year’s land lease and the first year’s taxes.
Another listing includes a $10,000 painting allowance, and Prudential Connecticut has several home listings where the seller has offered to pay the closing costs for the buyer.
In new construction, Prudential Connecticut is listing a home for a builder who is willing to finish the basement, at no cost, to get a sale, Diglio said.
“We’re seeing a lot of [incentives] now,” she said.
Dawn O’Connell, corporate property manager for H. Pearce Real Estate, works with people who are relocating far away for business reasons, so selling their homes quickly before the move takes on a new urgency. In some cases, families are split up or houses go unoccupied until the home is sold.
“It’s not your average seller who’s moving across town,” she said.
But incentives are still preferred to dropping the price of a home, even though sellers still tend to price their homes higher than what their Realtor recommends. They know the pendulum has swung to favor buyers, but often are slow to accept the changing realities in the housing market.
“They [sellers] don’t want to realize it,” O’Connell said.
So incentives are big in the relocation market. O’Connell mentioned one Wallingford listing, from GMAC, which has a 7 percent commission with a 4 percent co-brokerage commission designed to motivate real estate agents to actively show the property to their buyer customers.
“That’s totally unheard of,” she said. “Right there you know they are being aggressive.
That’s a huge amount of money these people are spending. Anything to try to get the property sold.”
Those sellers are also installing central air conditioning in the home to make it more attractive.
The seller of another home, a newer property in Branford, is now offering a $10,000 buyer “wish list” allowance if they get a contract within 30 days. The house has been on the market since September, O’Connell said.
Another of her listings, a Meriden house, comes with a $1,500 credit to the buyer for new carpeting.
“They’re trying to be creative,” O’Connell said.
Buyers, in general, are being savvier and asking for sellers to do more work to the house. Just a year ago, when the market so strongly favored sellers, buyers did not dare demand improvements, because the seller could just move on to another buyer, O’Connell said.
