Does an “allowance” in a Baton Rouge purchase agreement have any pull in an appraisal?

I recently received this question from a local Greater Baton Rouge REALTOR®:

“Does an “allowance” in a purchase agreement have any pull in an appraisal?”

Good question.

Allowances indicate dated condition to an Appraiser

allowances in baton rouge purchase agreements for decorating

One question a Baton Rouge Appraiser would ask is if the seller is offering a decorating allowance, whick is really a concession, of say $5,000 for carpet and paint, is the listing over priced? Seriously. Is the $5,000 just another concession and the seller is having to pay a buyer to buy their home? Same with excessive seller paid concessions over $3,000 to $4,000 of say $6,495, $8,000 and what I saw yesterday where a seller had to pay buyer $11,500 in seller’s closing cost (concessions) to get them to buy their home.

If an Appraiser reads in MLS sheet seller offers $5,000 in allowance for updating tells Appraiser home is dated. If an Appraiser reads this in Purchase Agreement, it means a Big Clue the Agent over priced their listing and/or the seller demanded an over zealous listing price.

Yes, I know there’s sellers that think it’s best to leave their home AS IS so buyer can add their colors and their personal touch. However, if home needs new paint and updated flooring, then that’s a defect, a deduction in value.  Carpet allowances or Paint allowances or both,

What I’ve been seeing more and more over the past 5 years is sellers spend up to $10K to $20K to update their homes, including slab granite, to receive top dollar at time of sale.

Does any of this make sense? Am I reading the market wrong here? Please understand that I strongly value the opinion of Agents working directly with buyers and sellers and are there to experience their reactions. And, if you ever have any tips for me, PLEASE let me know. I’m wide open for learning buyer / seller psychology from Agents.

Thank you, Bill Cobb, Appraiser

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About Bill Cobb, Appraiser

The Baton Rouge Residential Appraisal Blog is an information source provided by local Home Appraiser, Bill Cobb, and Accurate Valuations Group. Bill has 24 years experience as a Baton Rouge Residential Home Appraiser and updates his local network of sites weekly with reports, videos and audio reviews of local housing market conditions! 225-293-1500

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