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Pros and Cons of Offering Incentives to Buyers

By Thomas O'Shaughnessy | March 29, 2023

As a home seller, you have several options to make your property stand out in a competitive market. One of those options is to offer incentives to potential buyers. This could include things like offering closing cost assistance, purchasing a home warranty for the buyer, including appliances or furniture in the deal, paying for the home inspection, or offering a rent-to-own option.

Offering incentives can be a powerful tool in helping you sell your home quickly and at a higher price. However, there are both advantages and disadvantages to offering incentives. In this article, we'll explore the pros and cons of offering incentives to buyers as home sellers.


Attract More Buyers

Offering incentives could attract more buyers to your property. Buyers are always looking for the best deal, and a well-planned incentive package can be an effective way to grab their attention. By providing incentives, you are giving potential buyers a reason to consider your property over others.

Sell Quickly

Offering incentives can also help you sell your home quickly. In a competitive market, homes that offer incentives tend to sell faster than those that don't. The faster you sell your home, the less time and money you spend on costs such as mortgage payments, utilities, and maintenance.

Higher Selling Price

Incentives can also help you achieve a higher selling price. By offering incentives, you may be able to entice buyers to make higher offers than they would have otherwise because they see the added value of the incentives. Additionally, incentives can help offset some of the closing costs that buyers are responsible for, making it more likely for them to offer a higher purchase price.

Eliminate Some Stress

If you're selling your home because you're moving for a job or are dealing with other time-sensitive or stressful life changes, offering incentives can be an effective way to make the process easier. By offering incentives, you can attract more buyers, sell your home quickly, and potentially offset some of the costs associated with moving.

Motivate Realtors to Sell Your Home First

Realtors often have a list of potential buyers, and by offering incentives, you can get your property in front of those buyers first. Your realtor may be more likely to work harder or more quickly to sell your property if they know that there are incentives on the table.


Need for Disclosure

One of the downsides of offering incentives is that you have to disclose them to potential buyers. This means that you have to be transparent about the incentives you're offering, which could impact your negotiating position and make buyers believe you are desperate to sell if you're offering incentives. 

Buyers May Be Skeptical

While offering incentives may seem like a good way to attract more buyers, it can sometimes inadvertently have the opposite effect. Some buyers may be hesitant to accept incentives as they may view them as a sign of desperation on the part of the seller. If you're offering incentives that are too good to be true, buyers may become suspicious.

Added Costs

Offering incentives may decrease the net proceeds you receive from the sale of your home. Incentives could include paying a portion of closing costs, offering a home warranty, or even making repairs to the property. These costs can add up quickly and reduce the amount of money you ultimately receive from the sale of your home.

Potential to Attract the Wrong Buyers

Offering incentives can attract the wrong buyers to your property. Some buyers may be more interested in the incentives than the property itself, which could lead to issues down the road. For example, they may be more likely to walk away from the deal if they find a better incentive elsewhere or they may make low-ball offers. You may find yourself working with unreliable buyers and having deals fall through. 

Difficulty Determining ROI

It can be difficult to accurately assess the return on investment (ROI) of offering incentives to buyers. While they may help you sell your home faster, it's hard to know for sure whether the incentives are actually responsible for the sale or whether other factors, such as market conditions, played a bigger role.

Ultimately, the decision to offer incentives is up to you. If you're looking to sell your home quickly and at a higher price, offering incentives can be an effective strategy. However, there can be potential risks and downsides that you should carefully consider before deciding whether it's the right choice for your personal circumstances.

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