First impressions are important in any real estate market, but even more so now that home sales are slowing. So pre-sale renovations could become more common as buyers, who are already stretching their budgets, look for properties that are ready to move into. More and more home improvement companies are partnering with real estate professionals to offer this kind of help. Companies work with professionals to decide on needed home updates based on return on investment, manage design and renovation work, and provide financing options so homeowners don’t have to pay upfront . Owners can use the proceeds from the sale of their property to pay for subsequent renovations.
Pre-sale renovations can make hard-to-sell properties more attractive to buyers and increase the final sale price. A case in point: A townhouse in Charlotte, North Carolina hasn’t had any cosmetic upgrades since it was built in 1999. The cabinets and floors in the house were outdated, the countertops and bathrooms had tile in the old days, most appliances and fixtures no longer functioned properly and paint colors didn’t reflect current trends, says Will Allen, owner of Renovation Sells, a home improvement company that specializes in pre-sale renovations.
“In today’s property market, it’s more important than ever to understand what buyers are looking for,” says Kathryn Heynen, sales associate at Cottingham Chalk, who was the townhouse’s listing agent. “As a selling agent, I encourage my clients to make their homes as market-ready as possible.”
Before the renovation, the three-bedroom, two-and-a-half-bathroom townhouse was valued at $340,000. Renovation Sells recommended renovations for $64,000. After the four-week project, the house was listed at $495,000 and in just two days it sold for $570,000. That’s a 350% return on investment on renovations. “We’ve been in a killer market,” admits Allen. “But even so, the vision of our design team is what really made this list take off. The design brought even more attention to this list.
A hands-off renovation process
Renovation Sells met with Heynen and his client during the planning phase to gather feedback to ensure they made the most impactful design decisions for ROI while staying within budget. An in-house design team familiar with local trends presented the proposed materials, colors and finishes. Once approved by the agent and the seller, the firm completed the work.
The main cosmetic changes prioritized for the townhouse center around the kitchen and bathrooms, which, in general, tend to provide the highest return on investment. They were also the most outdated features inside the house, Allen says. “The countertops, cabinet finishes and backsplashes really made the biggest difference,” he adds. In the owner’s suite, the bathroom has also been refreshed with new flooring, paint, lighting and fixtures.
Allen says his company most often recommends paint, flooring, kitchen, bathroom, landscaping and curbside upgrades because they tend to drive the greater return on investment.
Pre-sale retrofits could become even more important as the market cools, Allen says. “Coming out of a hot market like the one we know, agents and sellers need to change their expectations. What has worked for the past few years – listing a home as-is and selling it the same day above asking price – won’t do with higher interest rates and weaker demand. Agents are now telling their sellers that to maximize their selling price, they need to do smart updates to get Instagram-worthy, move-in ready homes.
Allen, who has a background in construction management and a real estate license, says cosmetic tweaks, big or small, can help drive higher final sale prices. “There’s nothing I love more than creating a vision for a property and turning it into something truly beautiful,” says Allen. “Almost all of our businesses work with Realtors® and their clients, whether it’s preparing a listing or making cosmetic changes before the client moves into their new home.”