I recently listed a home for a client who asked me this question, “We can’t decide which we should do – replace the carpet or give an allowance to the buyer.”
The answer is easy – replace the carpet. Why? Here are two reasons.
The first reason to replace the carpet is it will help sell your home. Imagine a potential buyer walking into your home and they notice spots all over the carpet, maybe even noticing an odor from all those years of your cat or dog rolling around on the carpet. Chances are this will be a turnoff to the buyer and they’ll walk away. If you had installed a new carpet (in a neutral color), the flooring wouldn’t be an issue. One thing I’ve learned as a Realtor serving the Indianapolis area is that buyers like the smell of new carpet!
The second reason to replace the carpet is title companies and the Indiana Attorney General’s office do not like allowances. When the lender loans a certain amount on the house, then the buyer gives the seller their “allowance” at the closing, this is considered a kickback. This practice is now considered illegal.
If you decide to wait until after the closing to provide the allowance, the HUD1 statement will have to reflect that an amount has been withheld in the name of a certain vendor/contractor who has provided a firm estimate for the work. The buyer holds onto the check and after the work is completed, the buyer gives the check to the vendor/contractor.
I suggest to all my clients in areas around Indianapolis such as Brownsburg, Carmel and Zionsville to replace the carpet rather than offering an allowance. Your home is going to show better and that will help it get sold, at the price you want and in the time frame you want.