Should I replace my carpet, or offer an allowance?

When selling your Chicago area home, you may be wondering if you should replace your worn our carpeting, or offer an allowance for the new homeowners to pick their own. Generally speaking there is only one right answer. If you want to maximize your equity, you must replace it. I know that we’ll have some agents disagree with us. They’ll say that buyers will want to pick it out themselves. This is almost never really true, and even when it is, they are going to charge you for that luxury.

You’ll be paying twice for that carpet allowance

The truth of the matter is that buyers who do want to pick out their own carpet will usually not only expect the carpet allowance at closing, but they will also make a lower offer, effectively having you pay for it twice – they may even have you paying for it 3 times. Here’s a common scenario.

How the allowance scenario really works

should I offer a carpet allowance home staging after photoYou, the seller decide that you really need new carpet. Perhaps your agent told you, perhaps your home stager told you. You head on down to Cheapy McCheap Carpet Wholesalers. They tell you it will cost you $3000 to carpet your home. You, of course, picked the cheapest carpet and padding they had.

Now, your house is for sale. The carpet is a mess. It’s dirty, stained, worn out, and probably even stretched out with bulging areas.

Most buyers will pass on by. They won’t see what “potential” your home has, if only it had new carpeting. The ones who will see beyond it, will not make a full price offer, even though you are buying new carpet. They will see the damage to the current carpeting and put this home in a “fixer upper” category. They won’t just judge the carpeting harshly. Now they will judge everything harshly, including the idea that since the carpet is in rough shape, the AC unit, and other big ticket items might also be a little neglected or worn.

Let’s pretend your home is listed for around $350,000 with a $3000 carpet allowance. The offer that you are likely to get is probably going to be closer to $300,000 – $310,000. It may actually even be less. We see it happen all the time.

Don’t forget, they are going to want to have some idea of the cost of carpeting before they buy. They go to the Luxury Carpet Distributors and pick out top end carpet and padding (or at least a few grades above yours). The cost for this is a whopping $8000.

The end net offer, including allowances, will probably be a full 20% off of your list price.

What if you replaced the carpeting first?

Given the same exact scenario, had you replaced the carpeting first, your home would look and feel new. There would be a larger buying pool and it is even possible that your recommended list price could be as much as 3% higher. Buyers, because of the like new condition are less likely to low ball you, and you will have the ability to control what you spent on the carpeting, saving money there too.

Which is right, offering an allowance or replacing the carpet?

The answer is always the same. Replace the carpet. Giving the  joy of picking the new carpet to the buyer is a price tag that you will pay dearly for.

For more information on how to prepare your home for sale in today’s market, call Margaret and our team of home staging professionals today 815-530-3566.

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  1. […] The carpeting now looks fresh and clean. Clean lines on the uncovered table and fresh linen upholstery in the chairs makes this room feel luxurious and inviting. […]