Nicki & Karen

Improvements Prior to Close: Ask a REALTOR®

Nicki & Karen » December 31, 2009

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My daughter is buying a house in Utah. There is a $1,500 flooring allowance that she was told had to be used prior to closing. I do not understand why. She wants to put in flooring on the whole bottom floor of the house, which is more than the $1,500. Should she get a letter signed that if the house does not go through, she will be reimbursed for the extra flooring? Is this a normal routine? I have told her she should not do anything until the house has closed escrow. Thanks for your help.
– Mrs. Dobson

It is always a risk for a buyer to do any improvements before the close of the transaction. If for any reason the transaction does not close, there is a serious risk for the buyer (absent some written agreement between the buyer and seller for the seller to repay the buyer for the buyer’s out of pocket expenses for the improvements).

One way to get the improvements completed prior to the close of the transaction is for the seller to pay the vendor(s) for the improvements. If the transaction does not close, the seller will absorb the out of pocket costs. If the transaction does close, the costs of the improvements can be paid for by the buyer to the seller in the course of the closing (with an escrow or no escrow depending on the location of the property and custom and practice in that location).
– Karen Crystal

Karen Crystal, REALTOR® at Ewing & Associates Sotheby’s International Realty, specializes in estate properties. She brings a unique blend of efficiency, honesty, integrity and business- savvy to her clients.

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