Moxie Posted January 20, 2013 Share Posted January 20, 2013 Here is our situation--we're selling a small older (cute as a button, though) house in a very working class neighborhood. The house is under 90K. Not much is selling in the neighborhood and nothing is selling quickly. My idea is to include with the house, a $2000 cash bonus to help with moving expenses or whatever. My thought is that people buying in this price range don't have lots of extra cash floating around (I know when I bought this house 10 years ago I didn't have two nickels to rub together). My husband says it is nuts and that it isn't selling because people with low incomes can't qualify for a mortgage right now. If that is true, well, we're just stuck because I can't fix that. Is it even allowed to give a cash bonus?? I've seen carpet allowances before. Good idea, bad idea?? Quote Link to comment Share on other sites More sharing options...
elfgivas Posted January 21, 2013 Share Posted January 21, 2013 i think its a lovely idea, but i also think it might make you sound desperate. some folks, who knows how many, might look at that and think "what is wrong with that house that they want to give me money?" other folks might just be really grateful. good luck; i love that you are thinking outside the box! ann Quote Link to comment Share on other sites More sharing options...
tex-mex Posted January 21, 2013 Share Posted January 21, 2013 Never heard of a cash bonus. Carpet allowance or repair allowance, yes. The real estate market is super slow due to the fact most folks have to jump thru lots of HOOPS with the bank to qualify for a loan. Many people are finding it difficult to qualify for a bank loan. Your husband is correct. Quote Link to comment Share on other sites More sharing options...
sgo95 Posted January 21, 2013 Share Posted January 21, 2013 When we were looking for a house, we saw lots of ads saying they would give the buyer $X,000 towards updating something very outdated or $Y,000 towards closing costs (which is what people might need more help with). So I definitely think it makes sense to let buyers know you're willing to offer money back at closing, but not necessarily to specify it's for moving expenses. However, I think it's more important is that the house is presenting well to buyers and that it's priced right. Best of luck to you! Quote Link to comment Share on other sites More sharing options...
GraciebytheBay Posted January 21, 2013 Share Posted January 21, 2013 Here is a good article about this idea, or rather other incentives that might work in your favor. We know someone who is in the same boat as you and was asking on FB for ideas. http://www.nolo.com/legal-encyclopedia/how-offer-homebuyers-extra-incentives-29889.html Quote Link to comment Share on other sites More sharing options...
bzymom Posted January 21, 2013 Share Posted January 21, 2013 I would have loved to find an offer like that when buying my first home, but it would also have made me wonder if there were an issue with the house or some other factor behind it that would be a problem in the future. (But I am also paranoid when buying a house!) Other options to consider might be just reducing the price, contributing it directly to buyers' closing costs, offering it as a flooring or appliance allowance (if those are things that might need to be replaced after settlement). Whatever you do, I hope it sells quickly for you. Quote Link to comment Share on other sites More sharing options...
Annie G Posted January 21, 2013 Share Posted January 21, 2013 When we bought our first house, lots of sellers were offering a free vacation with the purchase. I thought that was crazy- who has time to take a vacation when they just moved into a house? Every time we move, we spend weeks trying to get things set up, do minor repairs, etc. But I think it's the same kind of concept you're going for- a bonus. Worth a try! Quote Link to comment Share on other sites More sharing options...
sbgrace Posted January 21, 2013 Share Posted January 21, 2013 We were in the same price range (under 110) with similar cash strapped buyers. We were told to offer to cover closing costs. The real estate agent told us that money to update, repair, or replace can be a problem. The bank can be really picky with the buyer about the spending of that money and so some buyers want to avoid it. I'm guessing the banks might have an issue with a straight cash bonus. They might see it as reflected in the price and so mortgage funded. I'm just guessing on that though. edited to add: I didn't read the other replies! Maybe incentives are just fine. Do you have an agent to ask? Our eventual buyers didn't request closing costs in their offer. However, we advertised it that way and the other two offers we received did want that money. Quote Link to comment Share on other sites More sharing options...
UrbanSue Posted January 21, 2013 Share Posted January 21, 2013 We bought almost two years ago and were low on cash. Our realtor got the seller to cover 3% of the closing costs which was the legal maximum in our area. It was pretty standard for his transactions at the time and it REALLY helped us out. I think they also cut us a separate check for some repairs the inspector had found and even a third small one at the last minute because of a misunderstanding with the appliance situation. But all three things were handled differently for legal reasons. Your agent or attorney should be able to talk you through the feasible options for your area. Quote Link to comment Share on other sites More sharing options...
mom2samlibby Posted January 21, 2013 Share Posted January 21, 2013 There are a lot of home buyers on HGTV that ask for closing costs to be paid by the seller. On the Property Virgins show, it was always written into the offer. I think you have a great idea. If you have the cash to offer, I'd do it. Quote Link to comment Share on other sites More sharing options...
happypamama Posted January 21, 2013 Share Posted January 21, 2013 When we did that (both giving and receiving), it's called "seller assist," and what it means is that they can finance some of their closing costs into the loan. Sometimes qualifying for a few thousand more in a loan isn't a big deal (especially spread across thirty years), but coming up with the 20% down payment plus the several thousand for moving and closing expenses can be hard for a young couple. It works like this: you offer the house for sale at 100K, and it'll take 5K in closing costs. (Just for round numbers, and I'm ignoring the down payment for this purpose.) What you actually do is offer the house for sale at 105K, with 5K in seller assist. The buyers get the mortgage for 105K and don't have to bring any cash to the table. You walk away with the same profit of 100K. I don't think it makes you look desperate. In the right circumstance, it makes you attractive to a couple who otherwise couldn't afford all the cash costs of buying. Quote Link to comment Share on other sites More sharing options...
DoppeltGemoppelt Posted January 21, 2013 Share Posted January 21, 2013 We are in the process of buying a house right now. Besides closing costs, it would also be very helpful if you purchased insurance for your buyer (costs you about $500). This way they know that they will not have to pay replacement costs for broken appliances, furnace, AC etc. for another year or two. You could also have a home inspection upfront, so that any potential buyer knows that there will be no nasty surprises before closing. Quote Link to comment Share on other sites More sharing options...
JumpyTheFrog Posted January 21, 2013 Share Posted January 21, 2013 I think the person above me means a home warranty, not insurance. Quote Link to comment Share on other sites More sharing options...
DoppeltGemoppelt Posted January 21, 2013 Share Posted January 21, 2013 Yep, sorry. Quote Link to comment Share on other sites More sharing options...
amyrobynne Posted January 21, 2013 Share Posted January 21, 2013 Lots of people offer $ towards closing costs -- you're right that it's easier for people to bump the mortgage up a little than it is to come up with down payment money. I'm not sure if you can offer cash with no strings attached to it but closing cost $ is essentially the same. Quote Link to comment Share on other sites More sharing options...
Unicorn. Posted January 21, 2013 Share Posted January 21, 2013 Closing costs are a great bonus/incentive. When we sold our house, the buyers offered us full asking price if we would pay closing costs. We jumped on it. We came out ahead of where we would have if we got an offer of 3- 5% less, or had we had to lower the asking price at all. Quote Link to comment Share on other sites More sharing options...
OrganicAnn Posted January 21, 2013 Share Posted January 21, 2013 I would wait until you have an offer and then use this as your first counter-offer. Example say the price is $90K and the first offer is $80K, then your counter-offer is $88K and you pay closing costs (or whatever you come up with). I think offering too much won't necessarily get you a buyer. If you are using a realtor, I'd talk over all of your options. Quote Link to comment Share on other sites More sharing options...
2squared Posted January 21, 2013 Share Posted January 21, 2013 I would offer a bonus to the selling agent. The buyers wouldn't see the offer in the listings, and a bonus to the seller's agent is likely to incentivize them to show your house and push for a close. Quote Link to comment Share on other sites More sharing options...
TranquilMind Posted January 21, 2013 Share Posted January 21, 2013 Here is our situation--we're selling a small older (cute as a button, though) house in a very working class neighborhood. The house is under 90K. Not much is selling in the neighborhood and nothing is selling quickly. My idea is to include with the house, a $2000 cash bonus to help with moving expenses or whatever. My thought is that people buying in this price range don't have lots of extra cash floating around (I know when I bought this house 10 years ago I didn't have two nickels to rub together). My husband says it is nuts and that it isn't selling because people with low incomes can't qualify for a mortgage right now. If that is true, well, we're just stuck because I can't fix that. Is it even allowed to give a cash bonus?? I've seen carpet allowances before. Good idea, bad idea?? I think it's a great idea. Even better would be to offer an extra bonus to the Realtor, if there is one. This house will move to the front of the line if you do, because we all know how the real world works, sorry to say. At any rate, your husband might be right, and you can't fix it. A couple of homes have sold in my rather moderate neighborhood recently so hopefully things are picking up. Quote Link to comment Share on other sites More sharing options...
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