Clarification Regarding Incentives
I need to write a clarification regarding my views on incentives and bonuses as a means of attracting buyers and sweetening the deal when selling real estate.
I guess that in the past I have written some things that would lead readers -- especially real estate agents and property sellers -- to believe that I think incentives and bonuses are a good idea in today's slow market. Having just re-read some of those past comments I can understand how such a conclusion might be reached. The reason is because I started writing comments about incentives and bonuses without laying out a proper foundation for my views.
Let me be perfectly clear on this matter ... I do not believe in bonuses and incentives as a part of the marketing plan for the sale of real estate. Period.
I do not urge anyone to use incentives to sell property. I don't believe you should offer the car in the garage, the boat on the davits, the plasma TV in the living room to get the buyer to make a purchase offer. I don't believe the seller should offer to pay homeowners insurance premiums for a year, the property taxes, the flood insurance or any of that stuff. I am opposed to sellers offering bonus cash to real estate sales people for bringing them an acceptable offer.
To me, incentives and bonuses are not marketing. They are a desperation tactic. They are an admittance on the part of the seller that they are desparate and need to sell the property at all costs. What's more, they are proof positive that the agent's marketing program was insufficient to attract a qualified buyer.
What I am in favor of is sound, solid, effective marketing. I believe that if you put forth the maximm marketing effort and give that marketing program ample time, one of two things will happen: 1. You will find a buyer for the property willing to pay the highest price, or 2. You will rightly conclude that the market has spoken and is not willing to pay the current asking price for the property, so a price adjustment is required.
If you do the proper marketing, the outcome will be number 1 or number 2. Adding an incentive or a bonus will have no bearing on the outcome. In effect, adding a bonus or incentive is nothing more than reducing the price of the property without lowering the asking price. That may be okay if you're a builder or developer who must maintain your future price point, but if you're a residential home seller you don't need to worry about future pricing in your neighborhood -- lower the price to reflect current market values and get the place sold.
Now, in those instances where a maximum marketing effort has been made and the seller absolutely refuses or financially can not lower the price of the property, then perhaps -- and I say perhaps -- a special incentive of some kind may be justifiable. In that case, look to some of the advice I have written in other stories on this blog site about incentives and bonuses.
What I am seeing all too often today from both agents and sellers is a quick jump into the incentive/bonus pool. Why is that? The reason is clear. These agents and sellers have never faced a market correction like we are having today, they want immediate results like we had a year or so ago, and they don't know how to implement an effective marketing program so they start offering incentives. They don't know any better! Frankly, most of them don't have a true marketing plan to sell property, so they start this stuff about bonuses to real estate agents and incentives to buyers thinking that's the way to call attention to the property and get it sold.
Hogwash!
What sells property today is the same thing that sold property in the past. A good property that has been well maintained. A realistic price. A motivated seller willing to consider bona fide offers from motivated buyers. A little patience. A solid marketing plan.
Don't muck it all up with screwball bonuses and goofy incentives.
For more information on the Tampa Bay real estate market, visit my website at www.TheStPeteRealEstateSite.com.
I guess that in the past I have written some things that would lead readers -- especially real estate agents and property sellers -- to believe that I think incentives and bonuses are a good idea in today's slow market. Having just re-read some of those past comments I can understand how such a conclusion might be reached. The reason is because I started writing comments about incentives and bonuses without laying out a proper foundation for my views.
Let me be perfectly clear on this matter ... I do not believe in bonuses and incentives as a part of the marketing plan for the sale of real estate. Period.
I do not urge anyone to use incentives to sell property. I don't believe you should offer the car in the garage, the boat on the davits, the plasma TV in the living room to get the buyer to make a purchase offer. I don't believe the seller should offer to pay homeowners insurance premiums for a year, the property taxes, the flood insurance or any of that stuff. I am opposed to sellers offering bonus cash to real estate sales people for bringing them an acceptable offer.
To me, incentives and bonuses are not marketing. They are a desperation tactic. They are an admittance on the part of the seller that they are desparate and need to sell the property at all costs. What's more, they are proof positive that the agent's marketing program was insufficient to attract a qualified buyer.
What I am in favor of is sound, solid, effective marketing. I believe that if you put forth the maximm marketing effort and give that marketing program ample time, one of two things will happen: 1. You will find a buyer for the property willing to pay the highest price, or 2. You will rightly conclude that the market has spoken and is not willing to pay the current asking price for the property, so a price adjustment is required.
If you do the proper marketing, the outcome will be number 1 or number 2. Adding an incentive or a bonus will have no bearing on the outcome. In effect, adding a bonus or incentive is nothing more than reducing the price of the property without lowering the asking price. That may be okay if you're a builder or developer who must maintain your future price point, but if you're a residential home seller you don't need to worry about future pricing in your neighborhood -- lower the price to reflect current market values and get the place sold.
Now, in those instances where a maximum marketing effort has been made and the seller absolutely refuses or financially can not lower the price of the property, then perhaps -- and I say perhaps -- a special incentive of some kind may be justifiable. In that case, look to some of the advice I have written in other stories on this blog site about incentives and bonuses.
What I am seeing all too often today from both agents and sellers is a quick jump into the incentive/bonus pool. Why is that? The reason is clear. These agents and sellers have never faced a market correction like we are having today, they want immediate results like we had a year or so ago, and they don't know how to implement an effective marketing program so they start offering incentives. They don't know any better! Frankly, most of them don't have a true marketing plan to sell property, so they start this stuff about bonuses to real estate agents and incentives to buyers thinking that's the way to call attention to the property and get it sold.
Hogwash!
What sells property today is the same thing that sold property in the past. A good property that has been well maintained. A realistic price. A motivated seller willing to consider bona fide offers from motivated buyers. A little patience. A solid marketing plan.
Don't muck it all up with screwball bonuses and goofy incentives.
For more information on the Tampa Bay real estate market, visit my website at www.TheStPeteRealEstateSite.com.
-30-
posted by Terry Ward at 7:25 AM
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