Offering anuity to the buyer

[Gretchen B]

Originally Posted by cjones15

We have been listed 2 weeks, almost 800 hits on realtor.com and not one single call/email of interest. We have been trying to decide if we are going to drop the price or offer an incentive to the buyer. Our realtor suggested offering an annuity to the buyer. The stipulation is the buyer would have to own the house for 3 years and at the end of the 3 years would be able to cash it in for $10,000. I have not seen this offered before. What is everyone's thoughts and opinions? I don't know all the ins/outs of offering an annuity (up front cost, etc). Can someone shed some light?

First of all, 2 weeks without a showing is not a very long time to start panicking, especially in this market. However, a really competitively priced home would probably have had a couple of showings by now, depending on weather, etc.

Secondly, 800 "hits" doesn't mean 800 people have looked at your house on realtor.com. "Hits" are always much higher than visitors, so you probably only had 80 "visitors" or so (I'm just guessing) looking at your house online, many of whom might be just browsing for a "someday" move.

I personally have not heard of the annuity thing as an incentive, but I can see where it might appeal to some. Be aware, though, that buyers in this market will want a REDUCED price AND closing costs. You could possibly offer the annuity as an Either/Or (either closing costs OR the annuity - buyer's choise). Of course you run the risk that if you offer the annuity that a buyer may want to negotiate for everything (great price, closing costs, and btw throw in the annuity, too). Why not just get your price competitive, and then use the annuity as an incentive if you get a potential buyer that can't decide between your house and another . . . or if you've got an offer that you want to counter higher - you could throw in the incentive and keep the price a little higher. Lots of options when it comes time to get a contract, but I don't think advertising it as an incentive will increase the showings. Price and marketing and networking do that.

[bentlebee]

Isn't it similar to the annoying rebates. I rather buy something with a discount than with a rebate. I know companies are making ton of money with rebates that are never send in. If I see 2 products and one has a rebate and the other a discount I will go with the discount one. If nothing else is possible I buy the rebate one.

[drjones96]

Ok. Say you want to buy a house that costs $140,000 (asking price). The seller is willing to do one of three things or possibly a combination of things.

1) Sell you the house for $140000 with $5000 cash for closing costs.

2) Sell you the house for $135000.

3) Sell you the house for $140000 with a $10000 cash Annuity payable in 3 years.

4) Some combinationion of the first two. $139k with $4k cash, $138k with $3k cash, $136 with $1k cash.

The bottom line is the seller needs to get the house sold for $135k in order to break even and not have to cut a check to the mortgage company at closing. And in order to not have to cut into funds set aside to buy a new home. It would royally stink to not be able to buy another home because you had to offer a buyer so much just to get out of your current home.