Ever heard of Buyer Incentives for Maui Real Estate?
Price is key, but extras and perks also might catch a buyer’s attention
Fancy buyer incentives like a new hybrid car parked in the driveway or a flat-panel TV might grab headlines but when it comes to actually enticing someone to buy a home in Kihei, Kahului, Wailea, Wailuku or Lahaina it’s the more practical perks that count. Serious buyers are looking for a place to buy a home, not a trip to Vegas or the mainland, says Howard Dinits who was the top selling Real Estate Agent for RE/MAX 2005-2013. Instead, effective incentives get to the heart of what’s on the minds of potential buyers — the overall cost of the home and the monthly payments they’ll have to manage. The bottomline is what matters. Help in bringing down the interest rate of the mortgage for the life of the loan by paying points, for example, can go a long way in giving one home an advantage over another. Contributions to the down payment and common closing costs could especially be of help to a first-time home buyer, or someone that barely has enough down. Incentives can be considered when the home is first listed as a way to distinguish it from the the rest. They can also be added when the home hasn’t sold in two or three months as a way of enticing a buyer without lowering the cost. Or incentives could arise in negotiations, when a buyer needs that one extra little nudge to commit. Make no mistake, the location and condition of a home are going to be its main selling points. But if sellers “put on their buyer’ thinking cap” and really consider what issues the buyer might have, it could make the difference between selling this month or next year. I tell all of my sellers to look at his walk away money. You know the actual cash they get after settlement. As that is what matters. A seller should figure how low he or she is willing to go, factoring in both the selling price and other incentives used to get a buyer to commit. But also be aware that most seller concessions need to be disclosed. When it comes to Maui Real Estate everything should be in writing. In addition, buyers and sellers need to make sure that they don’t exceed the lender’s allowable seller-paid assistance. Some allow 1%, 3%, or even 5% of the sales price, so it’s important to have your lender call Howard Dinits and explain what program you are qualifying under and the maximum allowable credit I can get you before we write the contract so I can be certain to have it in C-67 special terms in the Hawaii State real estate contract. Below are six of the most common incentives being used in the Maui Real Estate market today
1. Reducing the price
A price reduction might be the most common buyer incentive, and often it is the one that is looked at first. Be it central Kahului, Wailuku, or West Maui Lahaina Area, or South Maui, Kihei, Wailea, areas, price is what matters today. The price is something that is a common currency — it appeals to everybody. Be it a mainland investor, a local family, foreign investor from Japan or Canada. If a buyer has in her mind that she’ll pay $300,000 for a home and the seller won’t budge from $350,000, “$5,000 in closing costs and a plasma TV ain’t going to get the house sold. But those extra little perks can grab the attention of a buyer; it also might inspire a commitment from someone on the fence between two similarly priced properties. What Howard Dinits usually recommends before you reduce the price … think about what you can do with the same dollars in an incentive to entice a buyer.
2. Paying points
Sellers can offer to pay mortgage points for a buyer, an incentive I tend to use in today’s market, when rising interest rates are at the front of a buyer’s mind. One point is 1% of the loan amount, charged as prepaid interest. For example, instead of having an interest rate at, say, 6.5%, a seller might be able to pay points so that the rate is at 5.5% for the life of the loan. When a buyer sees a lower interest rate or monthly payment, that’s something they can relate to. I often sell homes based on the payment. For instance can your family afford $1,100 a month? The setup makes sense for a buyer who has furnishings to buy for the new place; it also can make for an easier monthly-payment transition for families that are upsizing or are getting out of a rental situation.
3. Down-payment aid
For some first time buyers, the hardest part of entering the ranks of homeownership is the down payment. This is also an area where a seller can help. It’s mostly first-time, VA, FHS, home buyers interested in this kind of assistance because they’re often the ones lacking in sufficient funds to complete the deal. It gets people into homeownership and out of the rental money pit. The disadvantage is that the buyer is financing that additional amount, because a seller would likely come down in the price of the home if a portion weren’t dedicated to down-payment assistance.
4. Help with closing costs
Closing costs include items ranging from taxes to title insurance and can add up, ranging between 2% and 7% of the loan value, according to Freddie Mac. So many buyers, especially those stretching to make a down payment, will be interested in having a seller help out. In Maui, buyers in every price range have been asking that these costs be covered. They ask for it because they know that they’ll get it.
5. Adding a home warranty
A residential service contract is sometimes thrown in as an incentive because it acts as insurance for a home’s systems, often including plumbing, heating and cooling. At a cost of a few hundred dollars, some real-estate agents consider it an inexpensive add-on that affords a buyer a little extra peace of mind. That peace of mind can be especially welcome during the first year in a house. Others take a different view, and say there’s often confusion over what elements are covered. If a problem is considered a pre-existing condition, assistance could be limited. It makes the sale go smoother and often a buyer won’t bug you to fix everything.
6. The little things
Other perks will appeal to buyers, too, ranging from the common to the unique. Payment of homeowner association fees, typically associated with condo developments are paid for 1 year. Also sellers with pools might also offer a year’s worth of upkeep for it, a welcome help to those worried about the maintenance of the backyard attraction. Or maybe if a corner of the home was designed to fit a baby grand piano, leaving that instrument behind entices a buyer to go through with the deal.
Now you know some of the ways to entice a buyer. Have a home to list Call Howard Dinits R(B) at Dinits Realty at 808-874-0600 or 877-434-6487 to list your home.
Buying a home or condo? Call Howard Dinits and I’ll score you a fabulous home with all of the right incentives. 808-874-0600