Presale Renovations Take Off

For large stock sellers who need more than one before launching their home, companies now offer renovation management and financing.

A couple from Cambridge, Massachusetts wanted to sell a two-bedroom apartment. The property had been rented to three students and needed work if sellers wanted the best price, said Carol Kelly, a Cambridge-based Compass real estate agent.

"[The couple] didn't want to rummage through their own pockets to pay for the renovation," says Kelly. "They didn't want the stress of investing their own money in property."

That's why Kelly recommended the Compass Concierge, a service launched by the broker in 2018 to finance pre-sale renovations. Sellers refund money from the proceeds of their sale. Compass made $ 17,000 improvements in the Cambridge apartment, moved new floors, painted kitchen cabinets, and electrically washed the house. It was worth it: The apartment, which was valued at $ 589,000, sold for $ 640,000, so sellers could pay Compass and get more out of their investment.

New value added service
Real estate professionals have long advertised a property before taking photos or planning demos. Many have even incorporated staging into their value proposition. Until recently, when sellers wanted or had to do more than just make decorative improvements, most agents could only make recommendations to trusted contractors. Sellers had to search their own pockets to cover costs. Companies are now offering a new value-added service - a way to save sellers and the headache of having to renovate their home before launching it. Essentially, these services allow sellers who have accumulated equity in their homes to repair and return their own homes, rather than accepting the lower returns that often result from working with an iBuyer or a domestic pinball machine.

In addition to Compass, Realogy announced last fall that the Coldwell Banker brand was testing a presale remediation program called RealVitalize in Columbus, Ohio. Denver; and Orlando and Tampa, Florida. Around the same time, Keller Williams announced its own pilot in California, Georgia, and Texas as part of the Keller Offers Concierge program.

Then there is Curbio, an independent presale renewal company founded in 2017. Its services are only available to sellers through a real estate agent. The company, located outside of Washington, DC, in Potomac, Maryland, was a member of the NAR Reach Technology Accelerator Class in 2019.

Unlike other pre-sale renovation programs, where DIY work is outsourced to third parties, Curbio carries out all renovation projects, from selecting construction materials to hiring subcontractors through supervising the installation and guaranteeing the quality of work with a one-year guarantee.

"We are licensed general contractors in every state we operate in, so we take care of it throughout the renovation process," said Rikki Rogers, Curbio's vice president of marketing. "We want to create a turnkey home seller experience where you don't have to worry about managing your renovation projects or paying upfront." The company does not charge home sellers interest on the money they borrow. Instead, Curbio receives offers for workers and materials in order to make a profit on the renewal of a client.


The Redfin Concierge launched in November 2017 has a different business model. The broker bills vendors a 1% registration fee and offers a pre-sale remediation service for a 2% fee that covers project design and management. The costs also cover the supply and cleaning of the houses. Unlike Curbio and Compass Concierge, home sellers who use Redfin Concierge are responsible for financing their own renovations.

“Our designer will take a tour and list the improvements we recommend. Sellers decide what renovations to do, and then our custodian oversees construction, "said Mia Simon, property manager at Redfin.



Like the Compass Concierge, the Redfin program is aimed at vendors who want to do small facelifts, "not those who need bigger renovation projects," says Simon. “Our goal is to make the house shine by doing little things, like painting rooms in neutral colors, patching holes in the walls, replacing outdated lights, or painting bathroom tiles. ""

"We want to create a turnkey home seller experience where you don't have to worry about managing your renovation projects or paying upfront." - Rikki Rogers, Curbio Vice President of Marketing

Kelly is one of the first users of Compass Concierge. Since the beginning of 2019, almost all the lists you have used have used the service. "For me, this changes the rules of the game in the real estate industry," said Kelly, who has worked as an agent for 33 years. "It's a great question to ask sellers to look in their pockets and put thousands of dollars in their homes before they hit the market." The good thing about this service is that the seller has no initial fees. ""



Courtney Smith, a Compass agent in Los Angeles, also believes that home improvement presales services are very straightforward. “We have long been a supporter of thoughtful renovations before the sale. Even before the Concass compass existed, our team offered interest-free loans to help [qualified clients] improve the market value of their home without forcing their new life or overcoming obstacles that might otherwise lead to it. Houses are difficult to sell. Smith said.

Smith's reasoning is consistent with why Compass entered the presale renewal industry. "We have developed the program to enable agents to better serve their customers by minimizing the short-term financial burden on the seller and maximizing the chances of a faster sale and a [higher] sale price," said Michael Coscetta, director of sales. and head of strategy at Compass and head of the concierge at Compass. Since the launch of Compass Concierge, the company has pre-funded more than 5,000 renovation projects. "We see clear signs in our data that these houses sell faster and at a higher price than other similar properties," says Coscetta.


Not all sellers are suitable
According to Rogers, Curbio focuses on sellers who want to do major renovations. The company's minimum project is $ 15,000. "Many of our projects are in the six-digit range," says Rogers.

According to Rogers, Curbio is selective because he makes large investments. “We don't say yes to all projects. If a seller approaches us and has $ 30,000 of capital available, but our experts discover that the seller would need $ 50,000 to renovate to give the house enough value, we would reject this customer. We do a very detailed analysis based on data upfront to see if a home seller is right for us. ""

Another difference: While Redfin and Compass market their janitorial services directly to home sellers, Curbio's commercial marketing is aimed directly at real estate agents.

Since Curbio is only paid after the house is sold, sellers who use the business must agree to reduce the list price of their house by 2% every 30 days until the house is sold. “If the house does not sell or the seller decides not to move, you only have to pay for the renovation. There are no additional penalties or fees, "says Rogers.

"We have developed the program to enable agents to better serve their customers by minimizing the short-term financial burden on the seller and at the same time maximizing the chances of a faster sale and a [higher] sale price." . - Michael Coscetta, director of sales and strategy for Compass; Chef, Concierge at Compass

Presale remediation services aren't for everyone, says Amanda Rose, a Berkshire Hathaway agent in Atlanta who worked with Curbio. “I think it works very well for sellers who may leave their home during renovation, or for an owner who does not live in the house. However, living in a house during major renovations creates frustration, ”says Rose.



"Renovations are much easier when the house is empty," said Brendon DeSimone, a New York real estate agent and author of Next Generation Real Estate who has not worked with a pre-sale renovation provider. That said, "You only have one chance to make a first impression, and if you can ask someone to pay for renovations upfront, I think it's often a smart move."

Dan Galloway, a Redfin agent in Washington, DC, has used Redfin Concierge with several of his clients. "It is a great product for people who sell remotely or are very busy and do not have the time to properly prepare their home to show off well," he says. "We recommend it for properties that are in fairly good condition, but need some cosmetic facelifts to compete with other houses in their price range."

Sellers whose homes need more than a facelift but don't get a curvy analysis should exercise caution. "Combining the cost of a [renovation] with the sale is much simpler and more convenient for a home seller," said Jim Molinelli, a design remodeler and Remodel author! Without going crazy or broken, "but it hides the fact that sellers will lose money in most conversions."

According to the National Association of Realtors' report on the remodel, most remodeling projects cannot afford the full cost. Real estate agents interviewed for the report analyzed the average cost of various projects and estimated what they would offset when they were resold. For example, a complete kitchen renovation costs an average of $ 68,000, and home sellers should only recoup around $ 40,000, or 59% of their investment. Bottom line: Some sellers better lower their prices to compensate for outdated features.

However, pre-sale remediation services are gaining ground. Curbio, currently active in eleven markets, including Chicago, Miami and Atlanta, plans to expand to at least 40 metro areas by the end of 2020. Compass Concierge is offered in all of the broker's real estate markets covering more than 100 cities. Coldwell Banker, Redfin and Keller Williams say they also plan to expand their programs.

"Until now, it has been almost impossible for home sellers who have considerable equity in their home but don't have a lot of money to renovate their home before selling it," Rose said. "This has changed".