Re: Carpet Allowance - Landlord Forum thread 341229

Re: Carpet Allowance by MrDan (Georgia) on November 29, 2015 @14:41

"What is a carpet allowance and will it deduct from my asking price??"

One problem is that, the buyers lender will not normally allow a credit allowance directly from the seller to the buyer at closing and will reduce the sales price by the amount of the repair credit allowance and then calculate the loan to value on that reduced sales price.

So, if you are giving the buyer a $5000 carpeting allowance at closing. The lender will reduce the sales price by that allowance and calculate the loan to value off of the reduce sales price. If the buyer is putting down a small down payment, they will have to increase it because of the carpet allowance credit.

If the buyer is asking for a 'credit allowance', it might be a sign that they do not have all the necessary funds to purchase the home. There are work arounds' on how this can be done, but it would need the approval of the buyers lender.

Two year old carpet does not necessary mean it's still appropriate, as the type and color of the carpet could be a problem in selling. If that's the case, replacing the carpet yourself instead of a credit allowance is a better route to go. A carpet allowance does not bring that ‘New Home Smell’ into your home but new carpeting will, it makes the house feel newer and smell clean.

Remember, buyers will expect a much higher allowance than the actual cost of replacement. With careful shopping you may be able to have carpet installed for $3000 while a Buyer will ask for $5000 in an allowance. Buyers will shop the high end market because, after all, they are spending your money.

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Re: Carpet Allowance by babbles (Georgia) on November 30, 2015 @06:47	[ Reply ]

Thank you Mr. Dan for that great explanation and others as well. I'm not willing to put in another dime at a "potential buyers" request unless there is a concrete offer. I have begun shop around for carpeting as suggested.