When you’re selling a home in Catonsville – or elsewhere in Maryland, for that matter – you may need to make some improvements. However, instead of making improvements that prospective buyers might not like, your REALTOR® may advise you to offer allowances.
What Are Allowances in Real Estate?
In real estate, an allowance is a sum of money you agree to pay to a contractor of your buyer’s choosing. There are several reasons a buyer might ask for – or you might offer – an allowance, such as for:
- If your carpet has seen better days and you’re sure a buyer will want to upgrade, it’s sometimes a good idea to offer a flooring allowance. That way, buyers can choose what type of flooring they want (maybe they’d rather have hardwood or tile) and they can choose the color they prefer.
- Whether your roof, your plumbing or your electrical system needs repairs, it may be a good idea to offer a repair allowance. That way, buyers can pick their own contractors and you don’t have to deal with the headache of having the house worked on while you’re trying to pack up and move.
- Things like kitchen and bathroom cabinetry, countertops or other amenities (including appliances) might need to be brought up to modern standards. If you don’t want to remodel and run the risk of buyers not liking your space’s new style, you can offer an allowance for the buyers to pick everything out themselves.
- If you know the interior or exterior of your home needs a fresh coat of paint, it’s sometimes a good idea to offer an allowance. That way, buyers can choose colors and pick out all the details – and you won’t run the risk of someone not liking what you’ve chosen.
There are many other reasons you might provide buyers with allowances, too. The main point behind them is that you know something needs to be repaired or upgraded, but you’d rather let the buyer choose his or her own contractors.
How Do You Give Buyers an Allowance?
When you’re selling your home, your REALTOR might include your allowances in your listing. For example, you may list your home for sale at fair market value but include language in the listing that says you’re willing to pay a certain amount toward the buyer’s chosen upgrades, improvements or repairs.
When you accept an offer, you’re agreeing to pay what you said you would. You don’t typically give the money to the buyer, though – you’ll put it in escrow, and when the buyer chooses a contractor, the funds will come out of escrow and go directly to the contractor.
How Much Should Your Allowances Be?
Every case is different, so it’s a good idea to talk to your REALTOR about the types (and amounts) of allowances you want to offer. For example, you might offer buyers a $2,500 allowance toward replacing flooring in the living room and hallway – but you might offer an allowance of $10,000 toward a new roof. Your agent can walk you through likely scenarios.
Benefits of Offering Allowances in Your Real Estate Transaction
A lot of people like to offer allowances when they sell. That’s because it has some advantages, such as saving the seller the hassle of finding and choosing a contractor, picking out styles and colors, and living in a home that’s being worked on. It also eliminates the risk that you’ll choose something that buyers won’t like – or worse, that could send buyers running for other homes that they think are more attractive.
Are You Selling a Home in Catonsville?
We can market your home to all the right buyers. When you’re ready to put your home on the market, call us at 443-955-1227 to find out how! If it’s easier, fill out the form below and we’ll get back to you right away.
Are you looking for your next home in Catonsville? Feel free to explore:
[/et_pb_column][/et_pb_row][/et_pb_section]
Follow Us