Should I offer a carpet allowance?

You should only do this if 1) You really want to help out the Buyers' of your home because you are going to be giving them a great deal as I will explain later or 2) You have way too much money assuming the phrase too much money describes a real situation.  Now you should not feel bad if you thought this was a good idea.  I hear it all the time and the idea is perpetuated by real estate professionals.  The multiple listing service is full of listings that say $x,xxx.00 carpet allowance. The logic seems sound.  This way they will get to pick the kind of carpet that they want.  Or, they are probably going to replace the carpet anyway.  Sounds good but only if you don't understand the way a Buyer chooses their home purchase.  They choose it emotionally.  They choose it often by the way it feels and they usually choose quickly.  I usually can tell if a Buyer is going to purchase a home or not within 30 seconds of being in the house. 

What you will be doing by offering a carpet allowance is giving up something for nothing.  A terrible negotiation.  You are giving up the cost of the carpet but it will not be reflected in your selling price.  Why?  Because the Buyers are going to make an offer based on how your house makes them feel and crappy carpet is not going to elicit those amorous feelings about home ownership that you need if you are to obtain a top dollar price for your home.  Even worst you may get no offer at all. 

The problem of bad carpet is exacerbated if you are selling a house with no furniture.  I have observed over the years that when a Buyer enters a house with no furniture their eyes immediately go to the floor because there is nothing else in the room to draw their attention.  This not only applies to carpet but any type of flooring.  I am only using the word carpet because that is what ties into the title of this post.

 

So, why is this idea so prevalent?

1. Because often the Seller does not want to spend the money until they know they can sell the house.  Unfortunately this is self sabotage and results in the realization of their fear, namely, the house not selling.

2. The Real Estate Professional is standing right in front of you often asking you to hire them to sell your house.  So, instead of telling you that you are wrong and risk losing the listing or getting a house with nothing to offer but crappy carpet they will take the carpet allowance.  The same professional might be less likely to follow this route if they were footing the cost of offering the carpet allowance.  It is worth noting that people who professionally sell houses, e.g., builders, investors, Realtors will always continue working until they have a finished product.  They don't stop short of installing the flooring and say they will want to pick their colors.  They want the house to wow the buyer and you should too.

3. Houses do sell all the time with a carpet allowance so it seems to confirm that it was the right choice.  However what is not realized is that the carpet allowance actually cost them money without benefit.

OK, OK I get it no carpet allowance.  So what is a Seller to do.  Install a carpet that is neutral and will have a wide appeal.  Install it before you offer your house on the market so that a Buyer will fall in love with your house and pay you a premium price.

How do you pick a carpet with a wide appeal? One of the easiest ways is to ask a local flooring company what their most popular choice is or what do they often sell to builders.  You will often find that it is a medium priced carpet that is less costly than what you might expect. I have found that most Sellers overestimate the cost of carpet because they remember installing carpet in their house at a higher cost.  Often, this because the carpet salesman upgraded them to a carpet that is much costlier than what would be expected in even a new home.

Well hopefully that myth is put down for good and you are now armed with more knowledge you can use to go out and sell that home for a record price.