For many homeowners, selling their home in its current condition is an attractive premise. Renovating the home before listing sounds stressful (and expensive). This is particularly true for families who have been living in their home for years and know that – even if their house is in good structural shape – buyers are looking for homes that are modern and updated.
This couldn’t be truer. Most buyers want move-in ready homes. According to BMO’s “Psychology of House Hunting” report, 71% of buyers are afraid of buying a home that needs work, and 80% of buyers decide whether a house is right for them within seconds of entering the property for the first time. It’s an emotional decision based on how they feel inside the home, which is, of course, influenced by the home’s condition and aesthetics.
If we analyze the most common reasons behind the decision to list without updating, it’s clear that listing “as-is” is rarely worth it.
“I just want to get on the market quickly and get it over with.”
Many sellers think renovations will take too long, and they simply want to get the selling process over with. While it’s possible that an unrenovated house will be scooped up by an investor with a cash offer quickly, the downside is that the homeowner will make significantly less money on the sale.
Flippers and investors typically offer 70% of the home’s value in order to cover their anticipated rehabilitation expenses. In other words, selling an as-is home quickly means sacrificing a great deal of profit.
Plus, listing without renovating first immediately shrinks the pool of potential buyers and leads to more days on the market. According to NAR, 88% of home buyers search for homes online, and unrenovated properties with unattractive listing photos will deter many homebuyers.
Not to mention that buyers interpret “as-is” as “having a serious problem.” Even if the home is in good condition and needs only cosmetic updates, buyers perceive “as-is” homes as risky purchases and, in many cases, not worth seeing.
The 70% Rule means that the seller immediately calculates that they will only offer you 70% of the estimated After-Repair Value (ARV). This gives them the ability to make a cozy 30% when they flip it and sell it.
“I don’t want to deal with the stress of renovating.”
While it’s true that typical home improvement projects can be taxing on the homeowner, pre-sale renovation is a completely different ballgame, especially if you work with a company that specializes in pre-sale home improvements (like us).
Since we’re renovating with resale in mind, we work from a portfolio of materials we know buyers will love, eliminating the need for homeowners to spend time visiting showrooms, sorting through samples, or ordering materials. And since we aren’t paid for our work until the house sells, we move significantly faster than normal contractors, completing most of our projects in 3-8 weeks.
“It’s too expensive.”
Pre-sale home renovation projects don’t have to be outrageously expensive. The key is exclusively investing in the projects that will affect the list price, and foregoing those that won’t. For example, buyers want an updated kitchen, bathrooms, and flooring. Investing in these rooms is a financially wise decision, as is taking down outdated wall paper, painting all walls neutral colors, and curb appeal landscaping.
Other upgrades might not be worth the cost. We often clean and stretch carpets instead of replacing them when we do our renovations, if the carpet is still in fairly good condition. We recommend using quality stainless steel appliances in the kitchen, but we do not recommend that sellers choose chef’s-kitchen-style appliances, which can cost double.
