Sorry, this is not a blog about parenting and children's allowances!
Here, we are talking about sellers offering an allowance for repairs.
I am often approached by sellers who tell me they know their home needs "X" (fill in the blank - new carpet, refinished wood floors, repainting, new hvac, etc). But, they say they would like to avoid doing the work now and just offer their buyer an "allowance". They want to know if this is a good idea? The short answer is NO! Despite the many explanations I hear, I stand firm that an allowance is rarely if ever a good idea.
Why? For every reason/excuse to offer an allowance, there is a reason NOT to;
1. "They will want to pick their own ___". Hogwash. The buyer may want to pick their own colors or finishes, but most do not unless they are buying a true "fixer upper" and planning a full remodel. When you say, "seller allowance for __" in a listing, you are pointing out a problem. Essentially, you are saying, "Our house needs work and we don't want to do it. We're going to give you our problem.... but we'll give you some money to handle it". Inevitably, you want to list your house at the full retail price of a move-in ready home, but offer the "cost" to replace carpet/paint, etc. But, you must remember that no one wants your problem or to do your work. In their eyes, you can't begin to compensate them for the hassle of organizing and orchestrating the work. Or, the house should be priced as a fixer upper. Buyers paying retail want simplicity and a move in ready home.
2. "They will see beyond the paint/carpet/flooring, etc". Wrong again. Most buyers actually lack the ability to visualize transformation. While a small percentage can visualize transformation, you lose the "first impression" of an appealing home. You can immediately translate this to dollars. If the buyer is forced to visualize, the buyer expects to be compensated. See The Shiny Penny
3. "I like the personality color/wallpaper/finish someone else will too". Here you are partially right. Someone probably will. But, most everyone will not. Would you rather fish in a pond with 100 fish, or 1 fish? Someone out there will like purple paint and have a great emotional response to it, but 99 people out of 100 will not and will see it as a negative. Why would you want to present a negative, when you can easily change it to appeal to 99%?
4. "I can't afford to do the work". This is the one valid reason presented. But, the allowance is not the answer. If you can't afford to do the work, price the house accordingly. And, know that houses that need work don't usually sell at 100% of retail price (there are market exceptions). So, your "allowance" will be part of the negotiation of the contract price. Also know that most lenders and most loan products won't allow the buyer to get cash back to make the repair or improvement anyway. The buyer is going to have be someone who can afford to make the repair from their own cash after closing unless they obtain a special type of loan.
Final thought; selling a house is a marketing task. Your goal is to present the best product possible in the best light possible using the best images/marketing materials possible. An allowance would be like an ad that says, "Buy our car. It has scratched up paint, a missing fender, needs a new seat, and the brakes need to be replaced... so you can't drive it right away. But, we'll give you the cost of the parts off the MSRP so you can get it fixed. Why would anyone buy that car? Why would they not go down the road and buy a different car, at the same net cost, that's in perfect condition that they can drive to work tomorrow?