Offering Buyers A "Decorating Allowance" Won't Make the Home Show Any Differently

By
Real Estate Agent with Realtor®, GRI, Landis e2 Real Estate, LLC

 Call it a "decorating", "carpet", "updating", "paint" allowance it doesn't matter, they're all the same thing. Seller acknowledging that the house has some cosmetic drawbacks (could be paint, worn carpet, dated kitchen/baths among other things) and they're offering a dollar amount to buyers so the buyers can just fix that flaw after they close.

 Here's the problem: When buyers view a home, they're focusing on how the house looks NOW.  Offering an allowance won't make that carpet, kitchen, bathroom, etc any more appealing when buyers are walking through the house. It's difficult for a buyer to erase images of how the house looks now even with the offer of an "allowance". Images are very powerful to buyers.

 Buyers choose a house based on emotion, feeling and when they picture themselves living there - all intangible elements but major factors in a buyer's decision.

 Buyers don't want a project, they're looking for a home. Many don't want to deal with having to complete updating or cosmetic work. They don't want the hassle, inconvenience, and time involved with it, especially for buyers who need to move right into the house. It's not necessarily about what updates would cost, it's more about the inconvenience and a dollar amount isn't going to make that factor go away.

 Offering an allowance to buyers, while it seems great and logical in theory, still is not going to change how the house shows. Any allowance is irrelevant if the buyers aren't seriously interested in the house and when there's glaring cosmetic work to be done, that's going to stand out in their minds.

 There's always another listing to look at, and given a choice between move in ready house and one that needs some cosmetic help, most buyers will choose the move in ready home. An "allowance" just isn't enough to compete with a listing where the work's already done. Buyers are excellent at substituting even when they don't realize they're doing it - why would they pay the same for a house that needs cosmetic work when they can pay about the same for a house that's fresh, clean, neutral and doesn't need a thing for them to move right in?

 If the circumstances are that completing the updates/cosmetic work before listing the house just isn't feasible, the price needs to reflect the current condition of the house, which of course is part of the in depth market analysis. Comparable sales are not just hard data, there's much more behind a sales price, and many times condition of the house plays a major role in affecting the sale of a given property.


 

 

 

 

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decorating allowance
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Rainmaker
525,699
Jeremy Blanton
210 Consulting~ Social Media Advisors - Myrtle Beach, SC
That is a very good article.  Very true, buyers do sometimes have trouble imagining what could be with a little bit of paint & carpet.
March 18, 2008 01:44 PM #1
Ambassador
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Stanton Homes
Stanton Homes - Our family designs and builds custom homes for your family - Raleigh, NC
Design/Build Custom Home Builder in North Carolina
Especially in a slower market.  There are plenty of choices, and if a buyer sees two homes at basically the same price, the "move in ready" home is almost always more appealing.
March 18, 2008 01:50 PM #2
Rainer
139,370
Harold "Hal" Place
A1 Connection Realty, Inc. - Sun City Center, FL

Hi Diane,

Good post, point well made!

Many if not the majority of buyers see what they see and can't see the larger picture. A home that needs painting, carpet, etc., is usually viewed as neglected. At least that is the case in our marketplace.

We always encourage our sellers to do the cosmetics before the house goes on the market. It usually proves to be time and money well spent.

Hal

March 18, 2008 01:55 PM #3
Rainmaker
83,428
Scott Williams
Realty Five of Defiance - Defiance, OH
Defiance, OH

That can actually turn people off from seeing it in the first place because they know that it needs work or has possibly been neglected over time.

Good article!

Scott

March 18, 2008 01:59 PM #4
Rainmaker
564,383
Diane McDermott
Realtor®, GRI, Landis e2 Real Estate, LLC - Charlotte, NC
Charlotte NC Real Estate Market
Thanks Jeremy, That first impression is difficult to overcome for a lot of buyers

Hi Penny, Absolutely! thanks for the comment.
March 18, 2008 02:00 PM #5
Rainer
69,677
Kathy Fisher Sells Lexington TN homes! 731.845.3413
Five Star Real Estate Services - Lexington, TN

It's my experience that people don't give any merit at all to allowances.  They don't want to hassle with them.  I encourage sellers to make those changes up front. 

Kathy Fisher Lexington TN Realtor

kathyfisher@remax.net

March 18, 2008 02:05 PM #6
Rainmaker
564,383
Diane McDermott
Realtor®, GRI, Landis e2 Real Estate, LLC - Charlotte, NC
Charlotte NC Real Estate Market
Hal, You make a good point about perception!

Scott, It is amazing to me sometimes how many buyers don't want to deal with anything cosmetic
March 18, 2008 02:05 PM #7
Rainmaker
564,383
Diane McDermott
Realtor®, GRI, Landis e2 Real Estate, LLC - Charlotte, NC
Charlotte NC Real Estate Market
Kathy, I agree. I note them when I'm the buyers agent - it shows there's some wiggle room and motivation on the part of the seller but you're right most buyers aren't enticed by them
March 18, 2008 02:06 PM #8
Rainer
41,803
Eugene Jones
Weichert Realtors - Somerville, NJ
That's great advice for sellers. You need to make your home as attractive as possible to buyers. By offering an allowance you're admitting the flaws of the home. But I also try to tell buyers that outside of their major must have's, you can make a home into what you want it to be.
March 18, 2008 03:56 PM #9
Rainmaker
564,383
Diane McDermott
Realtor®, GRI, Landis e2 Real Estate, LLC - Charlotte, NC
Charlotte NC Real Estate Market
Eugene, Very true - when it's an easy fix it's easier for buyers to deal with, they still may not offer top dollar though!
March 18, 2008 05:24 PM #10
Anonymous
Anonymous
Squatt

I suppose it would depend on the buyer and the price of the house and the amount of the incentive. If a seller offered credit back for something that needed repair or an option for them to have the repair done, I as a buyer would rather have the credit for the repair - for one the seller could get a low quality low ball bidder to do the repair leaving the buyer to do it all over again later. Also I would much rather have someone offer me allowances for paint tile carpet and whatever else than have the seller pick some color that the buyer would want to change again anyway...I've seen countless people fix up the house and sell it and before the buyer oves in they end up replacing somthing because the color was wrong or such and such,,,and of course sometimes the buyer can make out like a bandit if they have any knowledge of repairs and can do it themseleves....for example a buyer ask for and gets a credit of 5000 for a new fence and ends up replacing a few sections themselves for 500 pocketing the rest. Most of these responses sound like typical realtors looking for a higher sales price to bump commission, not looking out for the buyer.

March 22, 2013 02:52 PM #11
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Rainmaker
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Diane McDermott

Charlotte NC Real Estate Market
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