Are presale renovations worth it?

Only if it’s the right ones!

On my initial walk-thru with home sellers, I suggest some items to do prior to marketing, but also NOT to do some things they were considering.  It takes many years of experience to know the difference, and how far to go – (a) that particular house, (b) the location, (c) the price range, and (d) what else has been done to the home – of what the best return is for pre-sale work.  It is a crucial step of the home sale process.

I am hearing about a new wave in the housing industry that may hit St Louis soon, and that is having a construction company do major renovations to a home right before going on the market to obtain a higher price and faster sale.  Some brokerages or contractors will even offer to pay for the work upfront, and get reimbursed when the sale closes, while overseeing the work. Sounds great, right?  Here are things to consider before committing:

1. Who controls what gets done, how much it costs, and what it will look like.  Huge deal.  If the person in charge is not representing your best interest, and cannot show you a “before” sale price and “after” sale price with expected costs, say NO.  Big conflict of interest if the contractor or their rep is telling you what should be done, and “oh you’ll get that back for sure”, vs your Realtor, who is bound by state law to represent your interests, should have experience in knowing where to focus and how much, and be answerable to you at the closing table.

2. What happens if you decide not to sell, change Realtors when the agreement ends, or it sells for less than anticipated, and you were going to pay for the work from sale proceeds?  You may be forced to sell now and take less proceeds than you planned on, when otherwise you could have rented it, stayed there, or tried someone else. Even worse, not have enough proceeds to cover the work, and need to bring money in from other sources.

3.  Who is doing the actual work and entering your home? Do you have any say in the choice of subcontractors?  Are they a solid choice, or just “next in line” on a webservice? You want to have confidence in the finished product, that it will be professional and long-lasting for the next owner.

I view this trend as a negative for home sellers. It passes the buck from the Realtor to a 3rd party, and will almost surely end up costing the owner more in the end. Most renovations do not bring back what they cost. Hoeferkamp Real Estate can act as your trusted advisor and general contractor, helping you choose and oversee the actual contractors doing the work. I have the connections and the experience to ballpark repair costs and returns. This lets you control the funds, save you money, and lends expertise where it is needed the most – what gets done, how, and by whom. That is how you maximize your return on a home sale and limit your liability. Gary is Well-Connected!