First impressions matter in any housing market – but even more so now that home sales are cooling. So pre-sale renovations may become more common as homebuyers already stretching their budgets seek move-in ready properties. Several renovation companies partner with real estate agents to offer this type of assistance. The companies work with professionals to decide what home updates are needed based on the return on investment, handle the design and renovation work, and offer financing options so homeowners don’t have to pay up front. Owners can use the proceeds from the sale of their property to pay for the remodeling work later.
Pre-sale renovations can make hard-to-sell properties more attractive to buyers and increase the final sales price. An example: A townhouse in Charlotte, NC, hasn’t had a single cosmetic improvement since it was built in 1999. The home’s cabinets and floors were outdated, the countertops and bathrooms had old-fashioned tile, most of the appliances and light fixtures no longer worked properly, and the paint colors didn’t reflect current trends, says Will Allen, owner of Renovation Sells, a home improvement company specializing in pre-sale renovations.
“In today’s real estate market, it’s more important than ever to understand what buyers are looking for,” says Kathryn Heynen, a sales associate with Cottingham Chalk, which was the listing agent for the townhouse. “As a seller’s agent, I encourage my clients to make their home as market-ready as possible.”
Before the renovation, the three-bedroom, two-and-a-half-bath townhouse was valued at $340,000. Renovations Seller recommended $64,000 in renovations. After the four-week project, the home was listed for $495,000 — and in just two days, it sold for $570,000. That’s a 350% ROI on the renovations. “We’ve been in a killer market,” Allen admits. “However, our design team’s vision is what really made this listing take off. The design gave this listing even more attention.”
A practical renovation process
Renovation Sells met with Heynen and her client during the planning phase to gather input to ensure they made the most impactful design decisions for ROI while staying on budget. An in-house design team familiar with local trends presented suggested materials, colors and finishes. After the approval of the agent and the seller, the company completed the work.
The main cosmetic changes prioritized for the townhouse are centered in the kitchen and bathrooms, which generally tend to offer the highest ROI. These were also the most outdated features in the home, Allen says. “Countertops, cabinet refinishing and backsplash really made the biggest difference,” he adds. In the owner’s suite, the bathroom was also refreshed with new flooring, paint, lighting and fittings.
Allen says his company most often recommends upgrades in paint, flooring, the kitchen, bathrooms, landscaping and exterior curb appeal because they tend to generate the biggest ROI.
Presale renovations may become even more important as the market cools, Allen says. “When agents and sellers come out of a hot market like we’ve had, they have to change their expectations. What’s worked over the last few years – list a house as is and get it sold same day over asking price – just won’t cut it with higher interest rates and lower demand. Agents are now educating their sellers that in order to maximize their sales price, they need to make smart updates to make homes Instagram-worthy and move-in ready.”
Allen, who has a construction management background and a real estate license, says cosmetic tweaks — big or small — can help generate higher final sales prices. “There is nothing I love more than creating a vision for a property and transforming it into something truly beautiful,” says Allen. “Nearly our entire business works with REALTORS® and their clients, whether it’s to prepare a listing or make cosmetic changes before the client moves into their new home.”