Most real estate agents will advise that home sellers make sure their property is in the very best condition it can possibly be before it goes on the market. This is because the discerning buyer will keenly inspect the property for any flaws, especially when it comes to those parts of the home that may be particularly expensive to repair. These include the roof, the plumbing and repairs undertaken in the kitchen or bathroom, among other things.
However, for many sellers, these repairs might be too costly to undertake before the property is put up for sale. This usually means selling the property fixer-upper – but not all as a buyers are keen on forking out cash to acquire a property, and then having to fork out some more to make essential repairs.
What can a seller do to make their home seem more appealing to prospective buyers, then? Is there a way to make a property that needs some work something that buyers get excited about?
Offer an allowance
One way to make a property attract more attention from buyers despite the state it may be in is if the seller offers to credit the buyer with an allowance when the property is sold.
Very often recommendations for repairs stem from a key part of the selling process: the home inspection. During the home inspection, the overall state of the property is assessed, paying special attention to things that can cause issues for buyers down the line, like structural problems, or issues with the roof or plumbing.
It is important to mention that a home inspector will not make recommendations about things in the home that pertain to taste or to convenience. Should sellers dislike the colour of walls or the brand of air-conditioning system, these are not the type of things for which allowances should be made (although a fresh coat of paint in a neutral colour won’t break the bank and could make a big difference to the way the property is perceived).
The amount a seller offers will be based on the feedback they receive from the home inspector. Sellers thinking of making allowances a part of the sale offer should find out what the repairs recommended by a home inspector will cost, and use this as their guideline for the amount offered as an allowance. In this regard, sellers should get quotes on the repairs from a few different, reliable contractors in order to get a realistic average amount. It will also put the buyer’s mind at ease knowing that the amount offered hasn’t simply been sucked from the seller’s thumb.
The allowance may be written into the sales agreement either as a discount applied against the sale price or closing costs, or as a cash credit.
Benefits of offering an allowance
Offering an allowance to buyers may be beneficial to buyers. It allows buyers to make upgrades or repairs that are aligned with their own taste and preferences. Presenting buyers with the option to use an allowance to upgrade the home to something that is closer to their own taste can be appealing, as it allows them to choose finishes and other touches that are closer to what they like.
Disadvantages of offering an allowance
As much as offering an allowance can be beneficial to sellers who simply don’t have the money to undertake costly repairs, deciding to make this kind of proposal may also have unintended consequences for the seller.
First off, most buyers will prefer purchasing a property that requires little to no work before they move in. If a buyer is adamant about this fact, an allowance isn’t likely to change their mind. For this type of homebuyer, convenience is key, and some money to make a place look the way they want it to look might not be enough to persuade them to go through with the purchase.
On the other hand, when a seller acknowledges one flaw of the property, prospective buyers may think that there are other parts of the property that also need work, making the property in its entirety less desirable than it could have been.
Buyers are also likely to question the amount of cash that is being offered, citing the “hassle factor” that updating the property will require on their part.
All in all, offering an allowance should probably be something that is considered if the home is spending a particularly long time on market due to its state. However, in difficult market circumstances, like the world is currently experiencing in the light of the coronavirus outbreak, an allowance or cash credit could slice quite a bit off the asking price and convince buyers who might be weighing different properties up against one another.
What should a seller do if offering an allowance isn’t enough to get their property sold? Is there any other way to attract buyers if you don’t have the money to do repairs and renovations?
Like all other properties, fixer-uppers need to be priced correctly if they are going to sell – perhaps even more so than their renovated counterparts. When it comes to correctly pricing the property, your real estate agent can be a real asset. They understand the market they do business in, and know what a property that needs work will sell for in a particular city or suburb. Home inspections will point to those aspects of the property that will significantly affect its price, and getting quotes from contractors will show exactly how much you should probably deduct from the asking price so that it is fair.
Keep in mind that selling a home as is does not mean that buyers won’t still want to negotiate about the price. Let your real estate agent handle these negotiations on your behalf, and help you to price it in such a way that there is still some wiggle room, should buyers want to try and bring the price down further.
Buyers should also remember that small cosmetic renovations and repairs go a long way in making a good impression on buyers, and aren’t nearly as costly as bigger jobs like roof repairs or a redo of the home’s plumbing.
Just because a property needs some work, it certainly doesn’t mean it should look like it is falling apart. Sellers should make sure that the property is clean and tidy – even if the roof needs some work, cleaning the gutters is something that you can do yourself, which will show buyers that the home isn’t entirely dilapidated. The yard, walkways and driveway should be neat and tidy. You’d be surprised at how much of a difference a clean garden makes – and you can be sure that an unkempt yard and oil-stained driveway will immediately create a bad first impression with potential buyers.
A coat of paint in a neutral colour won’t eat up all your savings, but does make a space look entirely different and new. Another cheap fix that will soften buyers’ hearts is cleaning the windows. Some soap and water helps you to take advantage of natural light, and small touches like these tend to make a lasting impression on the people coming to see the property.
A clean and tidy property has far more potential than one that looks like it’s falling apart from the kerb to the roof. Taking care of small details won’t cost you much, but will make it a lot easier to convince buyers that this is a place chockfull of potential – not a dump that they’ll have to spend an arm and a leg on.
If a property is not quite up to scratch, one of the ways in which home sellers can make the home more attractive to potential buyers is to offer them an allowance as a part of the purchase agreement. This may entail offering buyers cash credit or giving them a discount applied against the selling price or closing costs.
Offering an allowance is something that is often done when a seller does not have the financial means to undertake costly repairs to the property before it goes on the market. This decision may convince doubtful buyers by giving them the opportunity to renovate and repair to their own taste.
However, offering an allowance can also make buyers think that the property has other flaws that have not been pointed out. Buyers may also question the amount offered, thinking that the hassle of having to do the repairs themselves entitles them to something extra.
Selling a fixer-upper does mean having to sacrifice some profit, but making sure the property is clean and tidy already makes it seem much more appealing, as does a fresh coat of paint.
Let a qualified and experienced real estate agent, recommended by Perfect Agent, help you to make the complicated decision surrounding the sale of your property. Need advice on selling a property that needs work? We have the perfect agent for your unique needs.