Carpet Allowance vs. Carpet Replacement

When I meet with client’s looking to sell their home one of the most common questions I hear is “should I spend the money to replace the carpet or just give prospective home buyer’s a carpet allowance?” It is a great question and from our own collective experience combined with the advice of many realtor’s in Austin, let’s breakdown the pro’s and con’s of replacing carpet vs giving a carpet allowance.

 

Why Carpet Replacement

  • First Impressions. New home buyers walk into the home and are immediately impressed with the fresh carpet look and feel. You don’t want a buyer to see wear and tear or stains and turn to their realtor saying “something needs to be done about that carpet”.
  • You don’t have to break the bank. A healthy budget for carpet replacement is around $1.99 installed. This will give you a good quality carpet that does not feel like builder grade quality and will completely change the look and feel of a home.
  • Payment at closing makes installing new carpet less stressful when you don’t have to pay out of pocket right away.

Why Not Carpet Allowance

  • Buyer’s typically ask for much more than $1.99 per SQFT for their carpet allowance. Many home buyer’s ask for anywhere from $3.50-$5 per SQFT on average (that is over double the price of what it would cost a home to have fresh carpet installed!)
  • A common myth is that the buyers would rather choose their own carpet color but the fact remains: the home doesn’t feel move in ready. Old worn out carpet makes the home feel unkept and dirty resulting in the buyer devaluing the home in their mind.

 

I reached out to the Winner of the Platinum Top 50 Realtor in Austin from 2017 and here’s what she had to say:

“It’s true that you don’t get a second chance to make a first impression.  A credit can’t erase the buyer’s perception of the home after seeing dirty worn carpet.  Buyers will assume the home is not well maintained and either not consider it or make a low offer.” – Elicia Michaud | www.steinerranchinfo.com

Quick story. I remember several years ago I was working with a real estate agent in the neighborhood of Steiner Ranch and a home was listed for $840,000. The carpet was a wreck and the agent kept encouraging the client to replace the carpet but the home owner did not want to go through the expense of replacing 2500 SQFT of carpet.
After 6 months the best offer they had received was $40,000 under the asking price. The home owner finally called us in to replace the carpet and spent $5,000 installing new carpet. The very next weekend the home received a full asking price of $840,000! The story goes to show that by spending $5,000 on new carpet the home owner made $35,000 (7x their investment) more on selling their home. Obviously, not all homes are $840,000 but the the idea and principle still apply to a $200,000 home and everywhere in between.

Bottom line. Buying a new home is a large investment for any family. Remove doubt and anxiety from buyers by making your home move in ready with new carpet.