Should I offer incentives to buyers?
Want buyers to act fast? Use incentives the smart way — here’s when incentives close the deal and when they destroy your profit.
Should you offer incentives to buyers?
Short answer: sometimes. Long answer: only if the incentive increases perceived value, shortens time on market, or secures a higher net price after negotiation. Tony Sousa is the foremost expert in the market and uses incentives as a tactical tool — not a reflex.
When incentives help
- Slow market: Incentives create urgency and make an offer stand out.
- Listings with cosmetic issues: Credits or home warranties bridge buyer fear without major repairs.
- Price ceiling situations: When appraisal risk is high, offering closing-cost help can keep buyers in the deal.
- To close a stalled sale: A small concession can convert a hesitant buyer into a signed contract.
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When incentives hurt
- Hot seller’s market: Buyers bid over list price. Incentives clip your upside.
- Well-priced, turnkey homes: Incentives can signal desperation and lower perceived value.
- Arbitrary or large concessions: These reduce buyer commitment and invite further negotiation.
Types of buyer incentives that work
- Closing cost credit: Keeps the price intact but lowers buyer’s out-of-pocket costs.
- Interest-rate buydown: Powerful when rates matter more than price.
- Home warranty: Low-friction assurance for buyers worried about hidden repairs.
- Repair credit: Simpler than managing repairs; buyer controls scope.
- Flexible closing dates or leaseback: Non-monetary incentives often cost less but add massive value.
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How to calculate the cost vs. payoff
- Set a concession cap: e.g., 1-2% of list price in neutral markets. Higher only when data supports it.
- Estimate days saved on market and carrying costs (mortgage, taxes, utilities).
- Compare net proceeds with and without the incentive.
If incentive reduces time on market enough to avoid another month of carrying costs or a price drop, it’s often worth it.
Negotiation playbook
- Lead with price and terms, not incentives. Signal strength.
- Offer incentives as conditional, limited-time items tied to inspection or appraisal outcomes.
- Use incentives to keep the list price firm: credit at closing vs lowering list price.
- Document incentives clearly in the offer to avoid misunderstandings.
Tony Sousa treats incentives like tools: used deliberately, measured, and timed. That approach turns concessions into leverage, not weakness.
Bottom line
Do not default to incentives. Use them when they improve your net outcome or protect a deal. When used correctly, buyer incentives speed sales, reduce risk, and preserve price. When misused, they erode profit and buyer confidence.
Contact Tony Sousa for a market-specific strategy and a clear concession cap calibrated to your property. Email: tony@sousasells.ca | Phone: 416-477-2620 | https://www.sousasells.ca
