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What Should You Do If You Don't Have Money for Repairs?

Real Estate Agent with RE/MAX Associates RS - 0019092

Your house has to be different from the others when it is for sale. Additionally, some features, like immaculate hardwood floors or exquisitely designed open kitchens, are excellent at attracting attention to listings. However, what happens if you are unable to finance renovations, even though some items are in grave disrepair?

In order to attract buyers, some sellers might decide to give their house an allowance, or discount. In this case, the seller would consent to bear the cost of fixing anything the buyer deems to be defective. The allowance could be included in the buyer's offer or an request for repairs addendum following the home inspection.  If the home purchase will be secured by a loan, the buyer will need to contact the lender in order to make sure that the allowance will not negatively impact the loan.



Benefits of offering an allowance

Offering a home improvement allowance is definitely a feasible option if you are unable to pay for the necessary repairs to your property.

According to REAL New York principal and co-founder Robert Rahmanian, this could be a wise move if you're having problems selling your home or if buyers or their agents mention that updates are necessary.

According to Rahmanian, "the kind of updates that need to be conducted very much depends on the allowance amount." The allowance could be calculated using the total cost of the required updates.

Getting written estimates from contractors to complete the work is the first step, according to Compass broker Martin Eiden in New York. After that, you should offer an allowance for the estimated amount.

“I would present it like this: ‘We were considering updating the kitchen and baths but didn’t want to choose a color the end buyer may not want, so these are the estimates, and the buyer can choose the final colors and finishes,’” he says.

There are two reasons why this is a good tactic. According to Shafaq Chawla, a real estate agent at Compass in Los Gatos, California, "buyers capable of having a 'vision' for the home may be excited because they have the ability to choose updates and colors to their personal taste and liking." She adds that buyers will feel more at ease knowing that the repairs will be completed to their satisfaction if they oversee the project themselves.



Disadvantages of offering an allowance

Offering a home improvement allowance is not always a good idea, though, primarily because most buyers prefer move-in ready homes.

According to Chawla, many potential buyers will decide against customizing their home, even though some would love the chance to do so.

“Depending on the scope of the work needed, it may require them to take time off from work or endure the hassle of chasing down contractors for the job,” she says.

Furthermore, it may not even be necessary to offer a home improvement allowance to attract buyers, depending on the state of the market.

"Even if a home is outdated or has a lot of condition issues, it will probably sell in a desirable neighborhood with limited inventory," says Sarah Adler, a real estate salesperson at Citi Habitats in Brooklyn, New York.



Other options

If you lack the funds to make repairs to your property, how else can you draw in buyers besides providing a home improvement allowance? Setting the right price is the best course of action. This involves considering the state of that particular market as well as the amount of work the buyer will need to do on the house.

You could also choose to repair the issues working with a contractor who will take payment at settlement. There are new companies using this as a way to work with sellers without resources to pay at the time of the repair.  One caveat - the house must sell and these contractors want the sale to happen sooner than later.

There is another alternative choice. Even though you might not be able to perform extensive repairs by yourself, you can still contribute a certain amount of labor to it.

“It costs you nothing to do a thorough cleaning and remove clutter,” Eiden says. In fact, he believes you’ll get the biggest return on investment by painting your home’s interior with a fresh coat of white. Best of all, you can do this yourself. White paint will reflect light and make the rooms appear bigger. Plus, it gives the appearance of a clean palette and can help potential buyers imagine themselves—and their stuff—in there.

In Conclusion

I have worked with sellers in these instances and there is no one size fits all approach.  Personalized service is what you need to make the right decision for the sellers and their families.  Emotions can run pretty rampant when selling a home so a deep understanding of the solution is tantamount to a successful sale.


by Realtor.com


Posted by


Wayne Martin
Wayne M Martin - Oswego, IL
Real Estate Broker - Retired

Good morning Christopher. When active I was a fan of pricing it correctly for there condition it is in and let the chips fall where they may. Nothing complicated, a straight forward approach. As my daddy said "there is an a$$ for every seat"! It worked for me and your suggestion may work for others. Enjoy your day.

Apr 10, 2024 05:24 AM
Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em: golfArizona@cox.net

 Great information. Thanks for sharing and enjoy your week!

Bill Salvatore, Realtor- Arizona Elite Properties

Apr 10, 2024 05:57 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good afternoon Christopher,

I like Wayne Martin  have done the same thing with pricing. Our company now offers a revitalize program that allows repairs to be completed and you don't pay for them until closing. It has helped out some sellers especially if they have lots of equity in the house and can be taken out of their proceeds.

Apr 10, 2024 02:36 PM
Richard Weeks
Dallas, TX
REALTOR®, Broker
Great information, thanks for sharing.  I hope you have a great day.
Apr 12, 2024 04:21 AM