Pre Sale Renovations That Pay
Dated: March 6 2020
Below is an excerpt from an interesting article by Daniel Bortz that was published in the January/February 2020 issue of Realtor Magazine. So, if you are contemplating renovation to increase the sale price of your home check this out or for the complete article visit https://magazine.realtor/home-and-design/feature/article/2020/01/presale-renovations-take-off:
“Combining the cost [of a renovation] into the sale makes it a lot less stressful and much more convenient for a home seller,” says Jim Molinelli, a design-build remodeler and the author of Remodel! Without Going Bonkers or Broke, “but it masks the fact sellers will lose money on most remodels.”
It’s true that most remodeling projects don’t recoup their full cost, according to the National Association of REALTORS®’ Remodeling Impact Report. Real estate agents surveyed for the report looked at the average cost of various projects and estimated what they’d recoup at resale. So, for example, a full kitchen remodel costs, on average, $68,000, and home sellers could be expected to recover only about $40,000, or 59% of their investment. The bottom line: Some sellers will be better off adjusting their price down to compensate for dated features.
Nonetheless, presale renovation services are gaining momentum. Curbio, which currently operates in 11 markets—including Chicago, Miami, and Atlanta—plans to expand to at least 40 metropolitan areas by the end of 2020, and Compass Concierge is offered in all of the brokerage’s housing markets, which span more than 100 cities. Coldwell Banker, Redfin, and Keller Williams all say they also expect to expand their programs.
“Until now, for home sellers who had substantial equity in their home but didn’t have a lot of cash, it was nearly impossible to make renovations to their house before they sold it,” Rose says. “That’s changed.”