Are you paying twice for that allowance?
I just finished reading Should I replace my carpet? by Stan Stepak. I completely agree with his supposition that buyers want move-in ready properties and worn carpets are not going to seal that deal. Some agents will recommend that rather than doing the necessary work, whether carpeting, painting, wallpaper removal or other updates, sellers provide an allowance. The argument is always the same... let the buyer choose the color or style that they want. As a professional home stager turned Realtor, this just makes me cringe.
First, an allowance does nothing to overcome the initial problem of getting buyers to fall in love with the home. The shabbiness of the current problem will be a huge turn off and the pool of buyers who will see past it will be much smaller than if the problem was taken care of in the first place. This may mean more time in carrying costs or additional price reductions because the buyer pool is smaller and as a result the home will take longer to sell.
Second, when a buyer does see beyond it, they will virtually ALWAYS offer less than list, equal or greater to the amount of the allowance. They will also still expect the allowance. This leaves buyers paying for the same thing twice. As if that isn't enough, buyers will also often expect a higher quality fix than the seller could have done, had they done it themselves. Guess who ends up paying for that? Yep. The sellers.
When all is said and done, the seller, who is trying to save either time or money will end up paying more for both things. The profession of "flipping" has been lucrative, even during the recent decline (although there are far fewer in the market). My staging business had one flipper customer who averaged 15 properties per month for the last two years. Most of the changes were minor - Paint, wallpaper, flooring, landscaping. Still he made enough money with these minor fixes, including paying for staging costs, to earn huge profits and keep teams of workers moving. Wouldn't it behoove most sellers to do what the professionals do?
Thank you for reading... Are you paying twice for that allowance?
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