The 3 Reasons Sellers Don’t Renovate Before Listing (And Why They’re Wrong)
Real estate agents know that outdated, un-renovated listings sit on the market and attract low-ball offers— eventually being scooped up by flippers, investors, or wholesalers for far less than the sellers wished for. That’s because today’s buyers are primarily looking for move-in ready homes. In fact, 71% of buyers are afraid of buying a home that needs work. Also take into account that 98% of buyers begin their home search process by viewing properties online. So if you’re wondering why sellers should renovate… it’s because every property needs to look Instagram-worthy to attract the most buyers.
Why Sellers Should Renovate
The increasing emphasis on move-in ready properties is one of the reasons flippers and investors are thriving. The number of homes purchased by investors in 2018 was the highest ever, with investors buying more than 11% of homes.
While sellers usually understand that they could sell their house for more, they often opt out of renovating for one of three reasons: they don’t have the money to pay for renovations, they want to get to market quickly and are worried renovating will take too much time, or they don’t want to deal with the stress of renovating.
First Impressions Matter
Foregoing pre-sale renovations causes problems for both sellers and agents. Sellers leave a great deal of money on the table, and agents end up with an unhappy client who, more often than not, blames the agent for the low sale price or lengthy stay on the market.
Fortunately, smart agents are avoiding these problems by honing their pre-listing expertise. The better they educate their clients about making the best pre-sale renovation decisions, the more listings they convert. The key is understanding and addressing the client’s specific concerns about pre-sale renovation. When agents show them how they can actually flip their home instead of letting an investor make the profit, it empowers the client.
Seller Concern #1: Money
Curbio’s “renovate now, pay at settlement” model eliminates the need for sellers to provide upfront cash. But to help sellers fully understand the business case, agents must go a step further and educate sellers on the magnitude of profits they relinquish when they opt out of renovating.
Typically, investors will offer sellers about 70% of the value of the home in order to make a profit and the average gross profit for a flipper in 2018 was $65,000. With Curbio’s renovations, the average gross profit for sellers is $50,000 and the average ROI is 215%. Clearly, sellers could make quite a lot more money by renovating first.
Seller Concern #2: Time
Many sellers are eager to get their homes listed right away and worry that renovations will be too time-consuming. However, un-renovated homes tend to languish on the market and require frequent price reductions, so the net result of avoiding pre-sale renovations often has little impact on total time to closing. In fact, homes renovated by Curbio spend an average of 58% fewer days on market than other listings.
For example, Curbio recently completed a renovation referred to us by a Keller Williams agent. We updated nearly every room in the home in just 5 weeks, and the sellers made an additional $55,000! If that isn’t a case for why sellers should renovate (an additional $11,000 in profit per week!) then we don’t know what is.
Seller Concern #3: Stress
It’s important to explain to sellers that pre-sale renovation is completely different than renovating your own home for your own enjoyment. Pre-sale renovations should be tailored to potential buyers’ tastes, not sellers’ tastes. Therefore, pre-sale projects require less decision-making and with Curbio can be an awesome experience for the sellers and agents.
One way Curbio eliminates stress for both sellers and agents is by curating and pre-selecting materials. We choose high-quality materials with broad appeal that are produced by reputable manufacturers. This ensures that they will be readily available for on-time kickoffs, every time. From cabinets and flooring to appliances and light fixtures, we choose materials that will deliver the highest possible ROI. Sellers don’t have to worry about trekking to a showroom, ordering materials, or managing deliveries.
To learn more about the value of pre-sale renovation and Curbio’s process, sign up for one of our webinars.