Seller Incentives not as Common with Hamilton, NJ Sellers

In years past, New Jersey sellers used incentives like cash enticements were the norm, in addition to free cars, big-screen TVs and stainless appliances at closing. But after nearly a year and a half of a government tax credit program, sellers have scaled back on marketing gimmicks and buyer incentives, largely in an effort to limit their losses.  The government tax credit was a particularly good deal for cash-strapped buyers and sellers because it wasn’t tied to the value of the house and it arrived in the form of a check with few restrictions on how it could be spent.

Meanwhile, new rules aimed at reducing the risk of mortgage defaults have made many once-common incentives illegal, so many sellers are simply resorting to one of the oldest tricks in the book: dropping the price.  In short sale situations, which are unfortunately too common in Mercer County, price is the one and only incentive available to most sellers.

Buyers today have access to more information about the market than ever before, so competitive pricing is the best way to attract attention.  In addition, buyers are worried about the economy and their jobs, and have focused on getting the best price—and the lowest house payment—rather than incentives.  A sign of the times, many buyers are making decisions based on the assumption that someone in their family might lose their job, and the mortgage payment will still need to be paid.

As posted on RisMedia.com, "Perhaps the biggest reason for the decline in seller incentives comes from the mortgage industry itself. In an effort to reduce defaults, the government has cracked down on all forms of seller incentives. New rules are designed to eliminate any exchange of cash or property before and after a closing that might affect how much equity a buyer has in their new home. That’s an about-face from a time when underwriting standards were much less stringent and cash-back signing bonuses and other perks were a common way to help push buyers over the fence. The goal now is to maximize a buyer’s investment in the hopes that they’ll be less likely to walk away from their obligation."

Current government loan guidelines limit seller contributions—usually in the form of closing costs—on conventional mortgages to 3% of the purchase price; FHA loans allow a 6% contribution, but that’s going to be reduced to 3% during the next few months.  Lenders say that losses are mounting on mortgages in which appraisers failed to discover—or sellers failed to disclose—incentives that were never deducted from the sale price of the house. That’s led to improperly priced loans and inaccuracies in valuations. Already Fannie Mae and Freddie Mac are asking lenders to repurchase billions of dollars in improperly underwritten mortgages, including some in which enticements weren’t properly disclosed.

RisMedia concludes,
"Sales without incentives:  here’s what works best today:

• Price it right. Buyers have access to lots of data, and they’ll know if your house is too expensive.
• Offer to pay some of the buyer’s closing costs.
• Maximize exposure. Saturate the Internet and all forms of social media with your listing.
• Use great photos, not good ones. Make sure your house makes a great first impression.
• Make it sing. Listing information must be complete and well-written.
• Curb appeal matters. Spend a little money on flowers, new plants and fresh paint.
• Inside, your house should look fresh, so make sure the paint, carpeting, light fixtures and appliances are updated and clean.
• De-clutter. Eliminate one-third to two-thirds of your stuff; hire a stager.
• Network. Sales come together because brains understand homes better than computers.
• Be patient. Statistics say that it takes 21 showings, not including open-house traffic, to sell a house."

It goes almost without saying that most of the above points can better be achieved and be successful using the expertise of a local and knowledgeable Realtor.  I have the experience in Hamilton and Mercer County, and in short sales, to help you sell in a reasonable time at the best price for the market.  Call or email today and let's discuss your options.

Joe Giancarli, SA
Real Estate Advisor
Short Sale Specialist
609-658-2612
jgiancarli@remax.net
http://www.joegiancarli.com/
http://www.njhomesource.com/
http://www.newjerseynewhomes.blogspot.com/
www.activerain.com/blogs/josephgiancarli

(c) 2010, Star Tribune (Minneapolis)