When your home is on the market, it needs to stand out from the crowd. And certain features like beautifully appointed open kitchens or impeccable hardwood floors are great at drawing eyeballs for listings. But what if you can't afford to renovate—even if certain things have fallen into a state of serious disrepair?

Some sellers may choose to offer an allowance, or discount, on their home to entice buyers. In this situation, the seller would agree to take the financial hit on repairing anything that the buyer sees as an issue. The allowance would be written into the buyer's offer, and the buyer would have to check with the lender for details that pertain to this type of clause. (Some lenders may have a problem with it.)

Benefits of offering an allowance

If you cannot afford to make necessary repairs to your property, offering a home improvement allowance is certainly a viable option.

Robert Rahmanian, principal and co-founder of REAL New York, says this might be a good strategy if you're having trouble selling your house or when a buyer brings up the need for updates.

"The allowance amount very much depends on the kind of updates that need to be conducted,” he says. The allowance may be determined based on the total price of the necessary updates.

According to Martin Eiden, a broker at Compass in New York, the first step is to get written estimates from contractors to do the work, and then offer an allowance for the estimated amount.

“I would present it like this: ‘We were considering updating the kitchen and baths but didn't want to choose a color the end buyer may not want, so these are the estimates, and the buyer can choose the final colors and finishes,’” he says.

This is a solid strategy for two reasons. “Buyers capable of having a ‘vision’ for the home may be excited because they have the ability to choose updates and colors to their personal taste and liking,” says Shafaq Chawla, a real estate agent at Compass in Los Gatos, CA. Also, by managing the project themselves, she says buyers will have peace of mind knowing that the repairs will be done to their liking.

Disadvantages of offering an allowance

However, there are also valid reasons against offering a home improvement allowance, chiefly the fact that most buyers favor a home that is move-in ready.

Chawla says although some buyers would enjoy the opportunity to customize the home, there are plenty of prospective buyers who will avoid going this route.

“Depending on the scope of the work needed, it may require them to take time off from work or endure the hassle of chasing down contractors for the job," she says.

Plus, depending on the market, it’s possible that a home improvement allowance won’t even be necessary to entice buyers.

“In desirable neighborhoods with limited inventory, a home will likely sell, even if it’s outdated or saddled with condition issues," says Sarah A. Adler, a real estate salesperson at Citi Habitats in Brooklyn, NY.

Other options

Aside from offering a home improvement allowance, how can you attract buyers if you don’t have money to fix up your property? The best solution is to price it correctly. That includes taking into account the conditions in that individual market and how much work the buyer will have to put into the home.

But there’s also another option. Although you may not be able to do extensive repairs on your own, it’s possible to put some level of sweat equity into it.

“It costs you nothing to do a thorough cleaning and remove clutter,” Eiden says. In fact, he believes you’ll get the biggest return on investment by painting your home’s interior with a fresh coat of white. Best of all, you can do this yourself. White paint will reflect light and make the rooms appear bigger. Plus, it gives the appearance of a clean palette and can help potential buyers imagine themselves—and their stuff—in there.

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