This is one of the most frequently asked questions of us on listing appointments.  The seller might have carpet that is worn or has stains.  It might be roof flashing that needs attention.  Maybe their son knocked a hole in the sheetrock or a window is fogging up on them.  It could be one of a thousand things that can happen to any home.

We understand that no seller likes spending money on a home they are trying to sell.  But we also know from experience that homes in poor condition encourage poor offers.  And conversely, homes in pristine condition encourage high offers.  It is rare that we see any carryover between the two. 

I am really talking about three levels of improvements here ...

1. Minor Cosmetic Improvements - This could be something as simple as removing wallpaper and retexturing a wall.  That is easy to do and cost effective.  Wallpaper is a very personalized item and if it comes in big doses, you've usually got a problem.  It could be repairing a broken balustrade or replacing a cracked window.  These are usually not big costs but leaving them the way they are is going to throw up red flags to the buyer and their agent.

2. Substantial Cosmetic Improvements - This might be permanently stained carpet or worn paint.  These can be quite a bit more expensive to take care of, but there is no bigger turnoff to a buyer than a big carpet stain in the middle of a room.  I've heard the argument that the buyers can pick their own colors if they are given an allowance, which is true.  But if you can't get a reasonable offer on the home in the first place, what does it matter?  We usually suggest that the seller just "bite the bullet" and replace the carpet with a neutral color.

3. Major Structural Repairs - This would be something that has to do with roof, walls, or foundation.  Unfortunately these can be the most expensive and time consuming repairs but they aren't going away on their own.  Most buyers aren't going to buy a home with these types of problems unless they can get a real "deal" and that translates to low offers.  And keep in mind, if the seller refuses to make the repairs and the buyer agrees to buy the home as is, there are still more hurdles to clear.  No lender or insurance company I know is going to risk their money on a home when major structural repairs needed.  Someone is going to have to do them prior to closing.  Since the buyer doesn't own the home yet, he is not going to sink his money into it, and the seller has already said he isn't going to do the repairs.  That transaction is doomed for failure no matter how bad the buyer, seller or agent want it to happen.

Keep in mind that many, if not most, buyers don't have the gift of visualizing what is not there.  What they see (and smell) is all they have to go on.  When they see stained carpet or worn paint, that is all they are going to remember about that home.  It also sends a signal that the home was not well cared for.  That may or may not be true, but in the buyer's way of thinking, if something that obvious was not addressed, what about the things that aren't so noticeable?   The buyer, and probably their agent, will start off with some suspicions about the home and they will make their offer based on what they know about the home.  That is never a good way to start negotiations.  On the other hand, when a buyer walks into a home in spotless condition, that signifies to the buyer and their agent that the seller is serious about selling their home and has a pride of ownership. 

Most sellers would probably prefer to provide an allowance at closing for things like carpet and paint.  That is perfectly understandable.  The money comes out of their proceeds at closing so they don't have to make any kind of monetary investment on the front end.  The problem with this scenario is they might never get to the closing unless they substantially lower the sale price.  The seller will probably now get hit with a "double whammy".  They had to reduce the price of the home and they can't realistically take the repair allowance off the table or the buyer is going to walk the deal. 

The toughest transactions for me always seemed to be the ones where the sellers wanted to offer an allowance for repairs or cosmetic issues rather than correcting the problems right off the bat.  Those homes remained on the market for an extremely long time.  And ironically, when the home finally sold, I believe those sellers would have done better if they had just spent the money on the front end to correct the issues.  I know the homes would have sold more quickly.

From our point of view, listing a home with major repair or outstanding cosmetic challenges which the seller is unwilling to address (or even acknowledge) is a no win situation.  The home will probably not sell and we sure don't need the practice listing homes.  We are in the business of selling homes.  Those are just not the types of properties we want to align ourselves with, so we politely "pass" on those listing opportunities and let our competitors run with them.

PLEASE NOTE

This is going to sound totally counter to what I have just said above, but there are times I believe it is in the seller's and buyer's best interests for the seller not to do the repairs and offer a repair allowance to the buyer.  Here is an easy way to differentiate ...

1. If the repair issue is known to the seller prior to the home going onto the market or was discovered in a pre-inspection, I believe the seller should make the repairs. 

2. However, if the seller learns about the repair as the result of a buyer inspection once the home is under contract, I always prefer to give the buyer an allowance for the repairs (unless the repairs are so severe that they will keep the home from passing with a lender or insurer). 

There is sound reasoning behind this strategy, but unfortunately, you will have to read about it in another article I wrote called "Who Pays For Repairs Once An Inspection Has Identified Issues?"

Tom Grisak Estate Homes Realtors, Inc - Texas License # 0329533 4-12-6

Your Realtors for Allentexas, Fairviewtexas, Lucastexas, McKinneytexas, Murphytexas, Parkertexas, Prospertexas