Home Selling in Pittsburgh>Question Details

rcmrmm, Home Seller in Austin, TX

What is an appropriate update allowance when selling an existing house?

Asked by rcmrmm, Austin, TX Tue Jan 29, 2013

Asking price $328,000 before offering allowance

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7
Tammy Sorco’s answer
You should have a market analysis done by an agent to determine the market activity and how your home compares to recent sales. The allowance varies in each neighborhood. There are many first time home buyers that take advantage of FHA loans, due to the little money that is needed up front to purchase a home but they have to have the income and credit to qualify, these transactions can include 3-6% in seller assistance towards their closing costs.
0 votes Thank Flag Link Wed Feb 6, 2013
Ask a local, full time agent to give you compable homes that have sold in the past and ask him/her to give you a comparative market analysis to find out the current Market value of your home.
Look closely at similar homes to yours that have sold in the past 6 months, within a radius of just a few miles. Personaly, I would not mess with a so-called allowance. I would price it right the first time. Ask your agent......
0 votes Thank Flag Link Wed Feb 6, 2013
It really depends on what updates are customary for your subdivision, in other words, what do buyers typically expect for homes in your neighborhood. If most homes are built in the 80's but have been completely remodeled prior to selling, then you will have to offer a substantial allowance if your home has had no updates.

The answer will be specific to your neighborhood and property, so it will be difficult for anyone here to give you a useful response without having more details about your property.
0 votes Thank Flag Link Tue Jan 29, 2013
The best advice I can give you is to talk with a local realtor in Texas. The laws change state-by-state. I am in Pa and allowences are very tricky up here especially when the clients need sellers assisit for closing cost. Good luck!
0 votes Thank Flag Link Tue Jan 29, 2013
It depends a lot on what the issues are. If there is a specific, known problem (e.g., carpets need to be replaced throughout, or the kitchens and bathrooms are dated), you can advertise a "carpet allowance" for this purpose. Sometimes this causes problems with lenders, though (especially these days), as it could be considered a form of seller assist and/or affect the property appraisal. You can't give a $30k "allowance"; allowances are typically small (i.e., under the seller assist limit).

If the problem is "dated kitchen," you might be able to address it fairly cheaply. You don't want to put in a new $50,000 kitchen right before you sell; you'd never get that money back. However, you might put in $2-5k for superficial changes that might make a big difference.

For instance, instead of replacing the cabinets, you can replace the cabinet *fixtures*, which makes them look new. You can cheaply remove flowery wallpaper, repaint, or replace one or two old appliances (even with used ones, as long as they're better than what you have).

If there is a lot of general work to be done, or there are substantive functional or mechanical problems, I'd advise simply dropping the price to account for it. You can support this by doing a pre-inspection and providing the buyers with documentation of what needs to be done, with cost estimates. (They should always do their own inspections, of course.)

Note that I'm in PA and you're in Texas, so laws and guidelines could be different there. Consult a local agent for final advice.

Hope this helps!
0 votes Thank Flag Link Tue Jan 29, 2013
At that price point, it depends on what you are allowing for. Sometimes you get better return (faster sale, higher price) if you do the updates yourself.
0 votes Thank Flag Link Tue Jan 29, 2013
Thanks for posting your question on Trulia.com!

We would need waaaay more info than you are providing to give you the best advice. What needs updated?
0 votes Thank Flag Link Tue Jan 29, 2013
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