I found an article in the Edmonton Journal about a family in Calgary that is offering $5000 for the buyers to put towards their wedding. They say it was their first home after they got married and they want to pay the good karma forward to another young couple. Interesting? Yes. Good idea? I think not.I have a number of problems with this strategy.
First off, their offer is only of interest to a small group of buyers. I'm sure there are plenty of couples who are already married, or those that don't plan on getting married that would also be interested in the home, let alone young families and other demographic groups.
Second, the lender must be made aware of the cash back offer and may not approve.
Third, they will get more attention by lowering their price than by offering cash back. In this case the home is listed at $409,900. So anyone looking for a home up to $400,000 won't even be aware of this home and will never know about the $5000 incentive. If they were priced at $400,000 even, then buyers searching up to $400,000 will find the home, as well as buyers searching from $400,000 and up (if you price at $399k only th will find the home).
The proof is in the pudding... the home has been on the market for over a month. While I'm not up to speed on the nuances of the Calgary market I am aware that it is quite "hot" right now. If their strategy worked their home would be sold by now.
The same agent mentions an incentive last year where two of her clients offered $1000 worth of beer to the buyers of their homes. In the end neither buyer chose to take the beer (I assume they just reduced the negotiated price by $1000). It seems to me these schemes are just an attempt to get some media attention and in this case it worked out well for the listing agent, but I don't think it's done anything for the home owner.
Other "bribes" I have a problem with include:
We'll throw in the with the home - offering unattached items does not encourage buyers to select your home over another home. Choosing a home is an emotional decision but a buyer won't choose the wrong home for them because there is a free boat included. If you're thinking of including a home entertainment system, piece of furniture, pool table, hot tub or other random item (chattel) with your home, offer it up as a carrot during negotiations. The buyer will place less value on the items if they're offered to begin with, and of course the lender may have an issue financing certain items as part of a mortgage. If you get close to a deal, you can always say "we'll throw in the hot tub if you take this counter offer" or something to that effect. Better yet, keep these items completely separate from the sale of the home - nothing is more painful than watching a negotiation worth hundreds of thousands of dollars fall apart over a $500 sofa. It is easy to lose sight of the big picture when it is jumbled up by all kinds of little items. (The exception to this of course is appliances which are commonly included and generally expected to come with the home in Alberta).
The buyer's agent bonus - we frequently see cash bonuses offered to buyer's agents and we are particularly unimpressed with this strategy. As a buyer's agent it just feels icky when you're showing a home offering a bonus (unless you have a low moral compass). In fact, our brokerage's policy is to rebate any portion of the commission over and above the agreed amount back to our buyers. If a buyer's agent takes a bonus for selling a home, and there is some sort of a problem down the road, they are in deep %&$! when the lawyer for the other side points out the fact that they received a bonus for selling the home in question.
Contests - less frequently we see offers like: "visit this home and be entered into a draw" or "the agent that sells this home will be entered into a draw for $10k." For the buyer to be entered into a draw they'd have to leave their name and contact information with the seller or the seller's brokerage, and read a bunch of fine print, and generally be distracted from their goal of finding a home. For the buyer's agent to win a prize they have to attend the draw, which ends up being a recruiting session for that brokerage and a party for their agents, so no one outside the listing brokerage attends. In other words, buyer's agents typically ignore this offer altogether.
In most cases you are better off reducing your price than offering cash, bonuses, prizes or chattels in the sale of your home.