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Old 02-16-2013, 10:06 AM   #1
luvavacation
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Does offering allowance make a house for sale more attractive? Realtor says no.

I am trying to sell my mom's house. She lives with me (Alzheimer's) and will never live in it again. It has been on the market for 3 months. The price has been lowered twice. It is not furnished, and closing can be immediate. House has no mortgage.

The house is a huge, 3,000 sq. ft. ranch with a small backyard and 3 car garage, partially finished basement. It has no real upgrades. My parents were fine with basics when they built the house 9 years ago. It is, however, a nice house, large and open interior with double sided fireplace.

Feedback from showings is that there are no upgrades and yard is too small. I am unwilling to put in thousands of dollars for hardwood floors, granite countertops, and stainless steal appliances, when we won't recoup any of it. Plus, what if what i choose is not to someone else's liking? I have given the realtor my opinion that, if someone really likes the house, they will make an offer, and I will entertain any offers. If you don't like the house, you will give negative feedback, no matter the price, no?

According to TV house shows and asking around, offering an allowance oftentimes helps attract buyers. With my own previous homes, we always offered a home warranty incentive, and our houses sold within the first week. Not sure if it was coincidence, but it did set my home apart from the others at the time.

Realtor says we need to offer at least a $15,000 incentive to make the house look attractive, because my idea to offer a $1,500 allowance will be laughed at and not even given a second thought. He is fighting me tooth and nail on this, and I just don't agree. But then, I am not a realtor, I am just a daughter that wants to sell my mom's house so she has money for continuing care, whatever the future holds. I don't know all the fine points of selling a home.

I hesitate to lower the price again, as the house is presently in line (or below) with the other homes for sale in the neighbourhood, though I do admit the short sale homes are priced much lower than my mom's house.

We have had no complaints regarding landscaping nor appearance. Only that there are no upgrades and yard is too small (it is a 3,000 sq. ft. ranch with a three car garage on a 12,000 sq. ft. lot, what do you expect?).

What do all you knowledgable DIS people think? Do I press the realtor to offer an allowance of $1,500, or even as a gift card to a local Home Depot? As a buyer, would that even sway you to give the home a second look, in comparison to a similar home in the neighbourhood?

Thoughts?
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Old 02-16-2013, 10:17 AM   #2
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I don't think a 9 year old house needs upgrades especially if it is priced below comps in the area. I think too many people think their home needs to be move in ready with all paint colors they like, granite, stainless, etc, and wont dare settle for anything less.
If I was in the market for a home, I would not hesitate to purchase something that "needs upgrades" because I am not the type of person that needs instant gratification and could live with something I don't necessarily like if it was in good condition. (I'm a assuming a 9 year old house is in good condition, just doesn't have top of the line stuff).
Having said that, I think you need to listen to your realtor if you want to sell the house. They would be best qualified to know what you need to do.
Good luck
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Old 02-16-2013, 10:29 AM   #3
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Why not just lower the price again? The longer it sits, the more people think something's wrong with it, whether it's price or something else.

I think lowering the price has proven more effective than offering incentives in real estate. One way or another, it's going to cost you.

ETA PS I sold my mother's house in a Buyer's Market, but it took two years. We'd cleaned, updated, and even done our own inspection and fixed things that were noted. We'd also lowered the price many times. It finally sold for a rock-bottom price. It's a hard pill to swallow, but it is really market-driven, so you have to go with it if you want to sell the house.
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Old 02-16-2013, 10:29 AM   #4
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If there are short sales on the market, you will probably need to lower your price even further to compete. This is a really nasty time to be unloading a house. Is there any way that you can arrange to rent it out until the market improves?
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Old 02-16-2013, 10:33 AM   #5
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Like luvmy3 said, if the house is only 9 years old, it probably doesn't need much in the way of upgrades. Just re-decorating to suit the buyers' tastes. So what if the house doesn't have a granite counter top? Some people don't like that. Stainless steel appliances? Most homes are sold without appliances at all, and some people don't want the upkeep of stainless.

I'm in the same boat as you - my dad moved into assisted living over the summer, and we've been spending every weekend since then getting his house ready to sell. (It's 1/2 hour drive each way from our house, so we can only work on weekends which is why it's taking us forever to fix up.) We had a realtor come out in July to tell us what absolutely HAD to be fixed and what would be nice if it were fixed. Now, the house was built in 1950 and other than re-doing the kitchen and bathroom 25+ years ago, nothing much was done. We're concentrating on things that would cause it to fail a home inspection: wiring, windows, waterproofing, roof, brick pointing. We pulled up the carpeting in the bedrooms - there's hardwood underneath. I am NOT going to refinish those hardwood floors; what if the prospective buyer would rather have carpeting? I'll use Murphy's Oil Soap to make them look good, but refinishing is out. The house had these old aluminum awnings - the realtor said to remove ALL of them. Well, we removed them from the windows (and it looks so much better), but left them over the front and back doors. Whoever buys the house can decide if they want fabric awnings or if they want to build roof-type awnings over the doors. At least there's some protection over the doors until they decide what they want.

I remember when we were looking at houses before buying ours, many people told us to overlook carpeting and wallpaper because those are things that can be changed to suit our tastes; the important thing is the structure and "bones" of the house. Yes, you want the house to look attractive, but nobody should expect to have a house that's ready to move into without doing a little bit of work to make it "theirs".
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Old 02-16-2013, 10:35 AM   #6
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If you were in my area, a $1,500 allowance would do nothing. My last house was in a coveted neighborhood. One of the few that had reasonably priced homes in a highly reputable high school district. Houses generally were on the market for a minute or two. Except this one house. It sat for weeks. They pulled it off the market, upgraded the kitchen and finished the basement, and relisted it. It sold in days, once it was relisted.

According to my realtor, no one wants to do the work.

So, you could spend some money to fix it up or you can discount the price so the buyer gets his cost, plus effort, back in price.

What kind of upgrades are missing? Are kitchen cabinets decent, but laminate countertops? Floors are carpet, in great shape? Are bathroom floors linoleum?

We are selling my dad's house, and our realtor really went thru how important pictures on the internet are. And I'll tell you, a vacant house shows dirt and age more than an occupied one. If you haven't, I'd at least paint and re-carpet. Upgrade light fixtures. My dad's market doesn't require granite, and my sisters think we can sell with old laminate. I am shocked, based on my market. But I at least anticipate a contract requesting a counter allowance. My dad's washer and dryer don't work, so we're either removing or selling as is. We're selling without a fridge, changing out the stove and dishwasher. changing the light fixtures. All of the above makes it show better, so we may not get more $$, but it will sell faster.

Good luck.
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Old 02-16-2013, 10:40 AM   #7
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An allowance will be more attractive than lowering the price an equivalent amount. Mortgages are based on the selling price, so if you lower the price by $15K, assuming 20% down, that will give the buyers $3K more cash in their pocket and $12K less of a mortgage. That's not as attractive as $15K cash to do upgrades. I agree with your realtor.

There is nothing you can do about the small yard. Because of the small yard and the short sales, you may have to lower the price significantly below that of other homes of the same size.
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Old 02-16-2013, 10:43 AM   #8
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If the house is priced right for its condition and features, it would sell. I agree with your realtor, a $1,500 allowance is really nothing, it would barely cover the cost a granite island, never the less anything else that a buyer may want to upgrade.
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Old 02-16-2013, 10:44 AM   #9
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I'd rather move into a house that already has the nice touches, than have to pick out my own.

I think you should lower your price.
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Old 02-16-2013, 10:45 AM   #10
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I just do not think 1500. would go too far in making upgrades to a 3000 sq.ft. house so I'd probably laugh too. I do try to look at the bones of a house though and would rather choose my own flooring so I think you are smart there (in all upgrades, actually)

For instance, I think if you decided to put granite in, you'd probably say, "OK, I'll give'm granite, what's the cheapest kind you have?" That's the kind most people will not care for... I'd rather choose for myself.

It took my mom almost 1 year to see her condo which was about 4 years old. But when the right person came along (and she lowered the price too), it finally sold.

One positive way to look at it is your mom is living with you so the money is not needed immediately for any type of facility. Those are super expensive and selling would be critical. Also, as the caregiver, please remember to take good care of yourself. I'm sorry your mom has this horrible disease.
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Old 02-16-2013, 10:56 AM   #11
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IMHO - a house that has only been on the market for 3 months and has already had two drops in price screams desperate. Another price drop so soon would confirm this. And I would probably offer even less thinking that these desperate sellers would take it.

An incentive like your real estate agent it talking about might be better than lowering the price a third time.
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Old 02-16-2013, 11:00 AM   #12
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$1,500 would not be enough of an incentive for me to make an offer on a house that needs upgrades. If the kitchen and bathrooms really need an upgrade that's major $$$. I really think you need to listen to your realtor on this one. If you want to try a lower amount, try $10,000.
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Old 02-16-2013, 11:19 AM   #13
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Why not offer the incentive to the realtor that gets the house sold! My house sat for over a year with no sale. Offered $$$ to the realtor that could close the deal and it sold in a week.
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Old 02-16-2013, 11:22 AM   #14
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Some the other things to consider:

You never get a second chance to make a first impression. The outside of the front of the house and the walkways should be very pleasant and in good repair. If people are walking in, they're never going to fully appreciate the inside of the house, especially if it's less than great. When we were looking at houses, we pretty much knew before we even went into a house if we liked it or not. I fell in love with my house from a picture.

If the yard is small and creating negative feedback, make sure it's as impeccably clean and pleasant as it can possibly be. Like if the the fence is broken, be sure it's repaired. Or if there's an ugly shed there, fix it up. Etc.

Inside: clean, clean, clean in appearance and aroma.

Pleasant touches inside like lit candles (could use electric), freshly baked cookies and fresh flowers can help create a good impression. (But alone, it's not enough to sell the house.)

Kitchens and bathrooms are really important to today's buyers. Just tune into HGTV to see - they like granite, stainless steel appliances, updated bathroom fixtures, fresh paint in neutral shades, hardwood floors (if possible) or at least neutral carpet that's clean, and no wallpaper or borders. If I were going to change anything, I would work on those things as simply as I could. And yes, I would throw some granite in - it's not that expensive and could save you a lot of time. (No funky colors, just something relatively plain that at least the buyer could live with for a while even if they don't "love it".) I took my neice to see a little house not too long ago, and even though it was tiny, the "upgrades" of those I listed above made it really adorable and it showed beautifully.

Of course, all of this is very subjective. But I think buyers of today are different than buyers of yesterday, in part, thanks to shows like those on HGTV and lower costs and interest rates. They're kind of "spoiled" if you will. Not only do they want everything they want (don't forget the "master suite"), they want it for a cheap price.

OTOH, you have buyers who are emotionally and financially invested in their homes, who don't always appreciate market trends and how to sell a less-than-perfect-in-today's-market home. They almost always think their house is worth more than it actually is, so realtors have their work cut out for them. One of my friends is a realtor, and to her, the most unpleasant part of her job is giving feedback to sellers and having them not listen to her advice, then their getting mad when the house doesn't sell.

Just my two cents.
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Old 02-16-2013, 11:33 AM   #15
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In a nutshell, a 1,500 allowance would have zero incentive for me. Lowering your house price would be incentive.

Just as you do not want to "sink money into the house", NEITHER does a buyer.

When we shop for a house now we have the "1 thing" rule and the roof may or may not be included depending on the condition.

A house could need roof but flooring and a/c & heat are relativly new. Or any of those combos.

Of course things are up for negotiation but if you are not properly maintaining the basics of the house, I would have to pass.
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