Recently a Realtor asked for some creative negotiating items a seller may offer to a buyer. Basically, what can the seller do to sweeten the deal so the buyer is more willing and/or able to go under contract. This Realtor, like many, realize that a purchase contract is about more than just the price. Sometimes these ideas for sellers mentioned below will sway a buyer towards that house, but it may also help the buyer better qualify. Either way, these ideas could help a seller and listing agent sell your house.
12 Ideas for How to sell your house
Realtors will recognize most of these ideas, but some real estate agents and sellers may not realize that one or more tips could finalize a purchase contract. Even after a signed contract, issues could arise and one of these negotiating tools may be necessary to get a buyer back on track. Do keep in mind that several of these ideas have limitations or are not allowed with all mortgage loan products or lenders. We hope that these tips help you sell a home!
Sell Your House Tip: Seller Paying for the Buyer’s Closing Costs
We will go ahead and discuss probably the most popular way a seller can help a buyer. That is to pay all or part of the buyer’s closing costs. This negotiation tool is especially common with buyers with low down payment loans. For instance, a buyer may have the 3.5% minimum FHA down payment required but coming up with the closing costs may be a stretch. Even if a buyer uses a no down payment loan such as VA or USDA, the seller often covers buyer costs. Although a buyer may have the funds to cover costs, including seller paid costs is a great strategy. Let’s say the buyer has $5000 in the bank and the closing costs, first year of insurance, and escrow set up is $4500. Well, the buyer could cover the costs. But, by the seller paying the costs it allows the buyer to keep their funds in the bank. Having a reserve fund not only could help the borrower qualify, but it could cover repairs to the home, curtains, or new furniture. Finally, remember that mortgage loan products have certain restrictions on seller paid costs limits for buyers.
How to Sell Your House: Pay Off Debt for the Buyer
What if you have a buyer and all the numbers work, but the buyer needs a debt paid off to qualify? Even though not all loans allow the seller to pay buyer debts, it is possible sometimes. A Veterans Administration home loan (VA) will allow for the seller to pay off a Veteran’s debt. This is accomplished through sales concessions which may be up to 4% of the sales price. VA loans allow for the seller to pay customary buyer closing costs, but this extra 4% could be used for paying off buyer debt among other creative items. Keep in mind that this must be mentioned up-front. Additionally, this must be disclosed on the closing disclosure and not done outside closing.
Real Estate Negotiating Tip: Repair Items on Home Inspection
Most buyers don’t want to go into a home that has issues. Although some buyers are cool with a fixer upper or getting a lower price because of some outstanding repairs needed. In some markets, especially on older homes, home inspections show up items that scare buyers away. Actually, a couple top Realtors recently told me they may start requiring sellers to obtain a home inspection prior to listing the home for sale. This strategy is to learn issues up-front and fix them. There is nothing worse than getting under contract and then it fall apart later because repair issues come up. Some sellers may even offer the home inspection to the buyers along with proof that a contractor repaired the items. If you think about it, most homeowners don’t crawl under the house and test all the systems of the house. So, the up-front inspection sounds like a good idea to avoid surprises later.
Are you not able to pay for repairs up-front as a seller? Then, agree to hire a contractor to repair the items closer to closing. The repair costs could get paid out of the seller’s proceeds at closing. Keep in mind that not all lenders allow this. But, with a licensed contractor’s certification the work is performed, this could be allowed.
How to Sell Your House Quickly: A Seller Could Buy Out the Buyer’s Remaining Lease
So, what if a seller finds a buyer interested in their property, yet the buyer is stuck in a lease? Usually there are options for an early termination of lease, but there would be a penalty. Typically a penalty for not giving a 30 or 60 day notice would be one month’s extra rent. Although it could be an even higher penalty. So, if a buyer currently rents, the buyer should thoroughly review their lease. For those renters that have more than a couple months of their lease remaining, it would be worth investigating the early buyout penalty. Just think, if a seller has a qualified buyer but their lease has a $1000 penalty to get out of a lease early. Then, paying the buyer’s penalty is generally a small price to pay in order to get a house sold.
Negotiating Tips for Home Sellers: Pay buyer’s mortgage insurance
We talked about the seller paying closing costs, but one little known idea to sell your house is paying the buyer’s up front mortgage insurance. This fee is commonly called a guarantee fee or funding fee. These are most common on government loans like USDA, VA, and FHA. Although, conventional loans have an option called single premium PMI. So, paying this fee could mean a lot to a buyer as it lowers the amount financed on their mortgage. Each loan do have rules on seller or lenders paying this fee. VA and conventional loans allow the seller to pay a portion of the funding fee. But, FHA loans require the whole funding fee to be paid or the whole fee must be financed.
Sell My House Fast Tip: Provide the Foundation Certification for Manufactured Homes
On doublewide manufactured homes, government loans require a foundation certification. This certification must generally be provided by a structural engineer. An idea is to pay for this inspection up-front and offer it to buyers. Foremost, it makes sure that any areas that must be corrected may be done early. Then, it also gives the buyer confidence before making an offer that the foundation will meet FHA or VA requirements. Finally, it is paid for which the buyer won’t have to take a risk of paying. Just think, a buyer doesn’t know anything about the foundation of a manufactured home, so this would give great confidence to a buyer.
Sell My House: Rent Back From the Buyer
Sometimes the buyer is not quite ready to take possession of the home at closing. For instance, there could be time remaining on a buyer’s current lease. Maybe on a second home purchase, the buyer won’t be using the home for a couple of months yet. For these and other reasons, a seller could offer to rent back the home from the seller temporarily. Although, keep in mind that if the buyer is purchasing the property as a primary or secondary home, the buyer must occupy within 60 days of the closing. In order to be considered a primary residence, the borrower must occupy the home. Therefore it is common for most programs to require occupancy within 60 days. Otherwise the property would be considered an investment property which are different interest rates, down payment, and guidelines. Now, if the home is being purchased as an investment property, then the seller could rent out the home as long as the two parties agree.
So renting the home back from the buyer could be a factor in solidifying a contract and closing for the seller!
What a Home Buyer Wants: Help Sell Your House by Including Personal Property
It is typical for a few key items to convey with the property to the buyers. Common items include appliances, washer & dryer, curtains, and maybe some furniture. Also, there is an occasional large item like a golf cart, lawn mower, and we have even seen a horse included. Think about a buyer that doesn’t have a riding lawn mower. That could be a large purchase a buyer would need to make after closing. But if a seller provides their lawn mower, it could make the transaction easier on the buyer. A key point to remember in transferring personal property is that lenders do not allow certain items to be included in the contract. The reason is that personal property should not contribute to the value of the collateral. Therefore, lenders will require certain items be removed from the purchase contract.
In order to keep the purchase contract clear of personal property, many agents use a separate personal property contract. This contract or bill of sale is used to list any personal items that the seller is providing or selling the buyer. It is totally separate from the purchase contract for the property to ensure that no value is given for these personal items.
Sell Your House Tips: Be Flexible in the Closing Date
For reasons mentioned in other examples above, being flexible on a closing date could be important for a buyer. A buyer may want the closing at the end of the month to lower daily interest collected at closing. Also, closing a few days into the month could give the buyer an option for the first payment to be almost 2 months after closing. In this case, if the closing is January 5th, the lender could collect interest through February 1. Therefore, the first mortgage payment would be March 1! This could be quite advantageous for a buyer to have time off of a rent or mortgage payment.
Sell Your House Tricks: Provide a Home Warranty to the Buyer
What a way to provide confidence to the buyer! If something was missed in the home inspection, then the buyer has an insurance policy to cover future issues. This is a very common item paid by sellers on contracts. A home warranty gives confidence to the buyer and confidence is important when buying something you just saw for the first time. Typical costs are $400 – $500, but optional coverages can increase the amount.
Ideas to Sell My House: Pay for a Moving Truck
One of the expenses of moving that may be costly includes movers and/or a moving truck. This can get really costly for long distance moves. Since these expenses are not “closing costs”, a lender would not typically allow this enticement to be involved in the purchase contract. Although, a seller will often include something like this outside of a contract along with the personal property agreement or similar. Additionally, a Realtor may offer moving trucks to their buyer or seller. When this is the case, it is obviously a help.
House Selling Tips: Professional house cleaning
This item should really be a given, but too often we hear buyers complain of their new home condition. Floors are dirty, miscellaneous items litter the home, the grass is uncut, and more. Have you heard the saying by Robert Baden-Powell, founder of scouting, “Leave this world a little better than you found it.”? Well, this should apply when selling a home too. Don’t just get rid of your home and push a problem to another person. Instead, transfer a clean home with a virtual bow on it! A seller that states up-front that a professional house cleaning will be performed tells the buyers that these sellers must take very good care of their home. Like mentioned before, confidence in a buyer is a good think for you as a seller. If you can’t afford professional house cleaners, then do your best to have a clean up day. Maybe even ask friends or family to help. Think about what you want when you move into a house and do it for the buyers. They will appreciate it so much!
A seller could obviously involve one or several strategies mentioned above to sweeten the deal for the buyer. When you are a seller, it is all about attracting a buyer, retaining the buyer throughout the purchase process, and closing with a happy buyer. If you are a listing agent and believe some of these items could help close a purchase, make sure to speak to the mortgage loan officer. There are some items that are only allowed with certain loan types or scenarios. Sellers should discuss these ideas with your listing agent to see which could help you sell your home. So, remember price is important to a buyer but these tools may be just as important to sell your house!
Author: Russell Smith
Team Move OVM Financial loan officer success is Russell’s primary focus. He provides the tools and techniques he used as a top producing loan officer. Additionally he offers the Team Move OVM Financial Agent Training Program. Sharing is so important to Russell so he works diligently to be a resource to loan originators and Realtors.