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Allowance: Effective For Your Kids, Not For Your Buyers

By Tori Lynn Wallitsch

Home Stager with Prudential Ambassador / Ross Designs, LLC

October 06, 2008 01:57 PM

When sellers consider putting their home on the market and the carpet or counters or vanities or light fixtures, etc are outdated, the all-familiar debate ensues - upgrade now or offer an allowance to potential buyers?

Many sellers think it is wise to offer an allowance and then the potential buyers can select what THEY want to put in. There are several backfires to this theory.

The first backfire is that buying a house is often an emotional decision. If a buyer doesn't fall in love with what they see upon entering the house, it is harder to appeal to that emotion with a small product sample of what they COULD have.

Additionally, living through renovations or even just organizing installation of carpet or counters or vanities or light fixtures, etc can be a hassle not welcomed by buyers who are already stressed out by the moving and home buying process. If the upgrades were installed before the buyer first laid eyes on the house, then this issue would be eliminated. Many buyers highly value "move-in ready" properties.

Thirdly, sellers are often afraid to move forward with upgrades now because they think, "What if potential buyers don't like what I pick?" The reigning guideline when preparing a home for sale is to go neutral. I have yet to hear of a potential buyer saying, "I don't want that house. That nice, new carpet is too neutral for me. I'd rather go buy the house with outdated, pink carpeting and pick something else out later." Many real estate professionals would agree that 9 times out of 10 the brand new and neutral carpet or counters or vanities or light fixtures, etc will win out over a buyer seeing dingy items but knowing that they can be replaced with an allowance.

Of course there are instances where it is impossible financially for a seller to make upgrades and the only way they can facilitate changes is to offer an allowance out of closing proceeds; however, if it all possible it is most effective to make smart upgrades now rather than later.

For more information on Home Staging services in Omaha, Nebraska, please call Ross Designs at 402.490.3244 or visit our website for more information at www.ross-designs.com.

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Karen Dembsky

Peachtree Home Staging LLC, Home Staging in Atlanta, GA - Peachtree City, GA

Atlanta Home Staging

Hi Tori Lynn -- all good points. Another to add is that when an allowance is advertised as a buying incentive it creates the image in the buyer's mind that the home is a "fixer upper" and possibly has not been well maintained.

featured in the group http://activerain.com/groups/RealWorldHomeStaging

Oct 07, 2008 01:04 AM

Teresa Mills Schremm

Looking Fine by Redesign, LLC - North Olmsted, OH

Online Home Staging - Coast to Coast, ASHSR

Tori Lynn, you nailed it! An allowance is a turn-off to most buyers because they perceive the house as being too much work, and they are seeking "move in ready" condition. If we can help get that message across to the sellers by making them think about their next home, and what they are willing to do, or not do, that's half the battle! I remember when we bought our current home...a lovely split colonial...with a distinct rustic feel...except the 80's TEAL carpeting in the living room and dining room! If I didn't have the ability to see the potential....the house would have remained vacant for some time! Great post!

Oct 07, 2008 01:24 AM

Annie Pinsker-Brown

Stage to Sell - LA Home Staging - Los Angeles, CA

Stage to Sell, Los Angeles Home Stager

I completely agree! They have to fall in love with the house first before they'll even consider what new carpet they want to put in. And they can't do that if the carpet is outdated and skanky. And Karen is right that it gives the buyer the feeling they're getting a fixer upper, which will make them more likely to ask for further price reductions.

Oct 07, 2008 04:54 AM

Tori Lynn Wallitsch

Prudential Ambassador / Ross Designs, LLC - Omaha, NE

Karen -- excellent point!

Teresa - teal carpet?!? I bet your home looks lovely now.

Annie - Many sellers and even agents sometimes think that I don't give buyers enough credit, saying that of course they are smart enough to see past what's in front of them, but they don't get that while some can, many can't.

Oct 07, 2008 09:00 AM

Michelle Finnamore

Toronto GTA, Alliston, Newmarket - Vaughan, ON

Preparing your property for sale

HI Tori Lynn, great post. :)

You are absolutely correct. Buyers for the most part, no matter what they say, want a move in ready house.

Even Home Depot is realizing, you can put all the how to seminars on that you can shake a stick at- most people realize they do not have the skill set to do things themselves and have it turn out well. Also, that time is a premium to most people today.

If the house is presented in a neutral way, they know they can move in and not have to do anything right away. If you want your house to move, update it and keep it neutral.

I have a carpet guy now that will take a post dated cheque for 30 days under $ 1500 and will wait for payment until closing on an order over $ 2500. He is my new best friend.

Oct 07, 2008 11:20 AM

Emma Vargas

Simply Staging - Cameron Park, CA

Simply Staging

Hi Tori Lynn- I just had a house that had the most awful carpet, the sellers were only willing to provide the allowance on the carpet. Well no one could get over the ugly carpet and the only offers they got were really low ones. Then they finally replaced the carpet and the house sold - and at asking price. TaDa!!!! I wish they would've done it sooner!

Oct 07, 2008 07:14 PM

Kathleen Lordbock

Keller Williams Realty Professionals - Baxter, MN

Keller Williams Realty Professionals

The only allowance I would go for in this business is possibly one for new appliances. That said the first impression is bound to be a lasting one and that image is embossed on their brains.

They stand to lose far more than the allowance they agree to pay out.

Hey, my children didn't even get an allowance.

Oct 09, 2008 07:59 AM

Tori Lynn Wallitsch

Prudential Ambassador / Ross Designs, LLC - Omaha, NE

Michelle - can I have your carpet guy's number too? JK! What a find. Does that make you rethink whether or not to accept Staging payment out of closing proceeds? That's been a hot topic around here.

Emma - great case in point!

Kathleen - my eldest son rarely gets allowance, although he does do his chores :-) I agree than an appliance allowance could be effective.

Oct 09, 2008 09:59 AM

Kathy Riggle

STAGING SMART N SOLD - Houston, TX

Houston Home Staging

Cute post title, Tori Lynn. Totally agree-bad carpet is such a turn-off that the seller will lose more than the cost of new neutral carpet, for sure!

Oct 09, 2008 10:23 AM

Cathy Lee

CL Design Services Home Staging - Danville, CA

ASP, IAHSP, RESA Danville, CA

This is such a great post! Placing a negative in the MLS "carpet allowance" already sets the image in the potential buyers mind the home is not cared for or the owner is in financial trouble. The seller looses big time!!

Dec 12, 2008 03:24 PM

Michelle Minch

Moving Mountains Design Home Staging, Pasadena, CA - Los Angeles, CA

Home Staging Los Angeles and Orange County, CA

Tori: In my experience the home buyer will take the allowance and also expect a price reduction due to the poor condition of the house. The home seller pays twice - once for the allowance and once for the lower selling price.

Dec 13, 2008 04:00 AM