What Is A Decorating Allowance?


As this Team NuVision video explains, new home builders and resale sellers sometimes offer a “decorating allowance.” 

Typically, this enables buyers to upgrade things like carpets, flooring and appliances and take advantage of the builder’s economies of scale. If you’re buying, ask the seller these questions about a decorating-allowance offer:
  • What terms must your offer satisfy to qualify for the decorating allowance?
  • Is the allowance credited at closing and can it be applied to your closing costs?
Make sure your lender permits whatever they propose and discuss the impact on commission with your real estate agent or new-home cobroker - they may agree to forego commission on the returned allowance. If they do, make sure it’s documented in the listing agreement. At closing, be sure the allowance addendum is included on the HUD-1 settlement form.