By Natalie Novarro, REALTOR®
Sotheby’s International Realty – Beverly Hills
Serving the Hollywood Hills • Sunset Strip • Surrounding Los Angeles Neighborhoods
Your Los Angeles home has been on the market for several weeks.
You’ve had some showings, maybe even a few interested buyers, but no offers.
Your agent suggests reducing the asking price.
But you’re wondering: What if I offered buyers a credit toward their closing costs instead?
Maybe that would make the property more attractive without having to lower the price.
It’s a reasonable question, especially when buyers are paying attention to mortgage rates, monthly payments, and how much cash they’ll need to purchase a home.
Should you reduce the asking price of your Los Angeles home, offer a buyer credit, or consider both?
The answer depends on why your home isn’t selling, what buyers are looking for, and how the numbers work.
Here’s how I would approach that decision.
1. Why Isn’t My Los Angeles Home Selling?
Before deciding between a price reduction and a buyer credit, I would want to understand why buyers aren’t making offers.
There are three things that need to work together to sell a home: pricing, positioning, and marketing.
Pricing means establishing a price that buyers can justify based on comparable properties and current market conditions.
Positioning means understanding what makes your home different and who the most likely buyer is.
Marketing means communicating those advantages to the right audience through photography, video, online exposure, and targeted outreach.
If the price is too high, offering a credit may not solve the problem.
And if buyers aren’t seeing the property because the marketing isn’t reaching them, a price reduction alone may not solve that problem either.
I’d start by reviewing the entire listing strategy.
2. What’s the Difference Between a Price Reduction and a Buyer Credit?
A price reduction lowers the advertised asking price of your home.
For example, if your property is listed at $1,250,000 and you reduce it to $1,200,000, buyers immediately see the new price.
A buyer credit works differently.
Instead of lowering the purchase price, you agree to contribute a specified amount toward certain buyer expenses, subject to the purchase agreement and applicable lender requirements.
Those expenses might include eligible closing costs or financing-related charges.
For example, you might keep the asking price at $1,250,000 but offer a $20,000 credit toward allowable buyer closing costs.
The buyer still needs to qualify for the loan, and the lender may limit how the credit can be used.
The important distinction is that a price reduction changes the advertised price, while a credit changes the financial terms of the transaction.
3. Can a Buyer Credit Help Sell My Home Faster?
Potentially.
Some buyers have enough income to qualify for a mortgage but are concerned about the amount of cash they’ll need at closing.
Others are particularly focused on their monthly mortgage payment.
A seller credit toward allowable closing costs or an eligible interest-rate buydown may help address those concerns.
But a credit is only useful if it solves a problem the buyer actually has.
For a cash buyer, a closing-cost credit may be less attractive than a straightforward price reduction.
And for a buyer who believes the home is substantially overpriced, a modest credit may not be enough to change their opinion.
The incentive needs to match the buyer’s needs.
4. Will a Price Reduction Attract More Buyers?
It can, particularly if the new price brings your home into a different online search range.
Most buyers begin their search online and filter properties by price.
Suppose your home is listed at $1,025,000.
A buyer searching for properties up to $1 million may never see it.
Reducing the asking price to $999,000 could make your listing visible to buyers who previously filtered it out.
That’s one reason a strategic price reduction can sometimes generate more activity than an equivalent credit.
The new price may also appear in listing updates and give buyers a reason to reconsider the property.
But there’s an important distinction between making a meaningful adjustment and making repeated small reductions that still leave the property overpriced.
I would want the new price to be supported by the market and positioned to attract the right buyers.
5. Is a $25,000 Buyer Credit Better Than a $25,000 Price Reduction?
Not necessarily. They accomplish different things.
Let’s consider a hypothetical property listed at $1 million.
The seller is considering two options:
Option A: Reduce the price to $975,000.
Option B: Keep the price at $1 million and offer a $25,000 credit toward eligible buyer costs.
Under Option A, the buyer purchases the property at a lower price.
Assuming a 20% down payment, the mortgage principal would be $780,000.
Under Option B, assuming the same down-payment percentage, the mortgage principal would be $800,000.
The buyer may be able to use the credit toward eligible closing costs or financing expenses, subject to lender rules.
But the buyer would generally have a larger loan balance under Option B.
From the seller’s perspective, both arrangements might appear to produce similar proceeds before considering other transaction expenses.
However, they are not automatically equivalent.
The buyer’s financing, the appraisal, the permitted use of the credit, and the seller’s closing costs can all affect the outcome.
That’s why I would compare actual estimated net sheets and lender-approved scenarios rather than assume the two options are interchangeable.
6. What About Offering to Buy Down the Buyer’s Mortgage Rate?
This is another option sellers sometimes consider.
A mortgage-rate buydown generally involves paying an upfront cost that reduces the buyer’s interest rate according to the financing arrangement.
There are different types of buydowns.
A permanent buydown may involve discount points that reduce the interest rate for the life of the loan.
A temporary buydown may reduce the buyer’s initial payments for a defined period before the payment returns to the full note-rate amount.
The structure and eligibility depend on the loan program and lender.
For some financed buyers, a rate buydown may provide more immediate payment relief than an equivalent reduction in the purchase price.
But it won’t necessarily make sense for every buyer.
And the seller shouldn’t advertise a specific payment benefit without lender-supported calculations.
I would have the buyer’s lender explain the available options before recommending a particular credit structure.
7. When Would I Recommend Reducing the Asking Price?
I would lean toward a price reduction when the market is telling us the home is priced above what buyers are willing to pay.
Some signs include:
- Very few showings despite reasonable exposure
- Competing properties offering better value
- Similar homes selling for less
- Buyers consistently commenting that the price is too high
- The listing sitting beyond the typical marketing time for comparable homes
- Previous reductions that haven’t brought the property into a competitive range
A credit won’t necessarily overcome an asking price that buyers can’t justify.
And if the home is priced outside the search range of its likely buyer, a credit may never get noticed.
Sometimes the most effective strategy is simply to correct the asking price.
For a deeper discussion, see my article on whether to reduce the price of a Hollywood Hills home.
8. When Would I Recommend Offering a Buyer Credit?
I would consider a credit when the asking price is reasonably supported by comparable sales but a specific financing or closing-cost concern is affecting buyer interest.
For example, a buyer may like the property and be comfortable with its value but want help with eligible closing expenses.
Or the seller may receive an offer requesting a credit toward certain costs.
In that situation, negotiating a credit may make sense.
However, I’d want to confirm that the buyer can use the credit under the applicable loan program and that the property can support the contract price.
A credit should help complete a financially sound transaction, not disguise an unsupported purchase price.
9. Can I Advertise a Buyer Credit in My Listing?
Generally, seller-offered incentives can be described in listing marketing, subject to applicable MLS rules, brokerage policies, advertising requirements, and lender restrictions.
But the language needs to be accurate.
For example, an offer of a credit toward allowable closing costs should make clear that the credit is subject to the buyer’s financing and the terms of the transaction.
I wouldn’t promise that every buyer can receive the same benefit.
A cash buyer and a financed buyer may have very different uses for a seller concession.
I would also make sure the incentive is clearly communicated to agents and prospective buyers rather than buried in the listing description.
10. What If Buyers Keep Asking for Repairs?
This is where a credit can become especially relevant.
Suppose a buyer likes your home but an inspection identifies repairs.
Instead of completing every repair before closing, the parties may negotiate an appropriate credit or price adjustment, depending on the transaction.
But there are important limitations.
Some property conditions may need to be corrected before a lender will fund the loan.
And not every loan program permits credits for repairs in the same way.
The buyer should consult the lender, and the parties should document the agreed terms correctly.
If your home has been receiving similar repair objections from multiple buyers, I would also reconsider whether the asking price adequately reflects its condition.
I’ve written more about this in What If a Buyer Wants Repairs on My Los Angeles Home?.
11. What If My Home Has Been on the Market for 60 Days or Longer?
I wouldn’t automatically offer a credit just because the listing has reached a certain number of days on market.
First, I’d compare your listing’s performance with similar homes.
Are comparable properties going under contract?
Are they reducing prices?
Are buyers touring your home but choosing something else?
Or is the entire price segment moving slowly?
The answers help determine whether the issue is price, condition, marketing, or broader demand.
If comparable homes are selling and yours isn’t, that’s important feedback.
And if your property has already been listed for several months, I would be cautious about making a small adjustment that doesn’t meaningfully change how buyers perceive it.
The longer a home sits, the more important it becomes to make the next move strategically.
12. What If My Home Is in the Hollywood Hills?
The Hollywood Hills present some unique considerations.
Two homes with similar square footage can have very different values because of views, architecture, privacy, parking, access, lot usability, and condition.
A home in the Bird Streets may compete with a different group of properties than one in Laurel Canyon or Outpost Estates.
Buyers may also be concerned about insurance availability, hillside maintenance, retaining walls, or renovation expenses.
If a property has an unusual feature that limits its buyer pool, an incentive may help in some circumstances.
But I wouldn’t rely on a buyer credit to overcome a fundamental pricing problem.
I’d first determine which homes buyers are comparing with yours and why they’re choosing one property over another.
13. Should I Offer a Credit Before Receiving an Offer?
Not always.
If the property is priced competitively and generating strong interest, I may prefer to let buyers make their offers before deciding whether a concession is necessary.
If the listing is receiving showings but buyers are hesitating over a specific expense, advertising a credit could be worth considering.
But if the property isn’t attracting showings at all, I’d investigate whether the asking price or marketing is the real issue.
Offering a credit before understanding the problem can mean giving away negotiating room without improving buyer interest.
I would want a clear reason for the incentive.
14. Could a Buyer Credit Cause Appraisal Problems?
It can be a consideration.
The purchase price still needs to be supported by the lender’s valuation process.
If the contract price is higher than comparable sales justify, a seller credit doesn’t automatically resolve that concern.
In fact, appraisers and lenders may consider concessions when evaluating a transaction, depending on the applicable standards.
That’s why I wouldn’t recommend inflating the contract price simply to offset a credit.
A sound transaction needs to work for the buyer, the seller, and the financing.
For more on this issue, see my article about what happens when a Los Angeles home appraises below the contract price.
15. How Do I Know Which Strategy Will Net Me More Money?
I would compare the seller’s estimated net proceeds under several realistic scenarios.
For example:
Scenario A: Keep the current asking price and negotiate without offering a credit upfront.
Scenario B: Reduce the asking price to a more competitive level.
Scenario C: Maintain the price but offer a specified credit toward allowable buyer costs.
Scenario D: Consider a combination of a price adjustment and a smaller credit if the market and financing support it.
For each scenario, I’d evaluate estimated sale proceeds, closing costs, timing, carrying expenses, and the likelihood of attracting a qualified buyer.
The highest contract price doesn’t always produce the best overall result.
And a strategy that looks attractive on paper may not be useful if it doesn’t generate an acceptable offer.
16. What Would I Do Before Making a Recommendation?
I would review the listing’s performance and current market competition.
Specifically, I’d want to know how many showings you’ve had, what buyers are saying, which comparable homes have sold, and whether your asking price is still supported.
I’d also look at your home’s strongest selling points and whether they’re being communicated effectively.
Then I’d discuss your priorities.
Do you need to sell within a particular timeframe?
Are you trying to coordinate another purchase?
Would you rather make a price adjustment now or test an incentive?
Those answers matter.
The right strategy is the one that addresses the actual reason buyers aren’t moving forward—not simply the one that sounds less painful than reducing the price.
Frequently Asked Questions
Is it better to reduce the price of my home or offer closing-cost assistance?
It depends on the reason your home isn’t selling. A price reduction may attract a broader group of buyers, while closing-cost assistance may be particularly useful to certain financed buyers.
Will a buyer credit lower the buyer’s mortgage payment?
Not automatically. A credit used toward eligible discount points or an approved rate buydown may reduce certain payments, but the benefit depends on the loan terms and lender requirements.
Can a seller pay all of a buyer’s closing costs?
Not necessarily. Seller contributions are subject to loan-program limits, eligible expense rules, and the specific transaction. Buyers should confirm allowable credits with their lender.
Does a price reduction make my listing look desperate?
Not necessarily. A well-supported price adjustment can show buyers that the property is competitively positioned. Repeated reductions without a clear strategy may be less effective.
Can I offer a buyer credit on a luxury home?
Potentially. Seller concessions can be negotiated at many price points, but their usefulness depends on the buyer’s financing, needs, and transaction terms.
Will a buyer credit help if my home is overpriced?
It may not. If buyers believe the underlying price is too high, a credit may not address the problem. Reviewing comparable sales should come first.
Can I offer both a price reduction and a buyer credit?
Yes, depending on the transaction. However, I would evaluate the combined effect on your net proceeds and confirm that any credit is permitted under the buyer’s financing.
Thinking About Reducing the Price of Your Los Angeles Home?
If your property has been on the market without selling, I wouldn’t automatically recommend another price reduction or a buyer incentive.
I’d want to understand what’s happening first.
Are buyers seeing the listing?
Are they scheduling showings?
What feedback are they giving?
And how does your home compare with the properties that are actually selling?
I specialize in the Hollywood Hills and Sunset Strip, and I work with homeowners throughout Los Angeles who are evaluating their selling options.
If you’re wondering whether to lower your asking price, offer a buyer credit, or rethink your listing strategy, I’d be happy to take a closer look.
Visit my Contact page or call/text 323-719-3360.
About the Author
Natalie Novarro is a real estate agent with Sotheby’s International Realty in Los Angeles, specializing in the Hollywood Hills and Sunset Strip.
With over 20 years of experience and more than $100 million in career sales, she works with buyers, sellers, and investors throughout Los Angeles.
For more information or to get in touch, visit the Contact page or call/text 323-719-3360.
This article is for general informational purposes only and is not legal, tax, financial, appraisal, or mortgage-lending advice. Seller concessions and financing requirements vary by transaction and loan program. Buyers and sellers should consult qualified professionals regarding their specific circumstances.