Can You Really Over Renovate and What Does that Even Mean?
Working with a buyer interested in a fixer-upper is exciting. They have big imaginations and are enthusiastic about the potential of a home. However, it’s essential to avoid getting caught up in their excitement and remain an impartial advisor. Sometimes, first-time remodelers that caught the HGTV renovation bug have grandiose and unrealistic plans for a house. They may not fully understand the cost to undertake such projects, and they may inadvertently over renovate. Fortunately, as their trusted real estate agent, you have Remodel It to help them keep their vision, and purse, in check.
Can you really over renovate, and what does that even mean?
If, after your client completes their renovations, their house is the nicest on the block by a wide margin, then they over renovated. Especially if they are an investor that plans to flip the house. Over renovating (spending too much money) will devastate their returns if you can’t sell it for a high enough price. You want to make sure the home stays within the neighborhood’s parameters, both in style and in price. Ideally, over time, the neighbors will also complete renovations, and the quality of the entire community will improve. But this doesn’t mean they should build a palace right from the beginning. Styles change, new products and technologies come out, and eventually, even a palace might be outdated. So advise them to take a more reserved approach, keep the quality of their renovation similar to that of the neighbors with nicer homes, and plan to renovate again in 10-15 years when styles have changed. Using Remodel It to help your client estimate the costs of their projects, before they buy that fixer upper or even talk to a contractor, will help them better understand the costs associated with their purchase. Fully understanding renovation costs can help keep them from getting in over their head and making a poor financial decision.
So what information can I provide a buyer (or seller) about the quality of other homes in the neighborhood?
If you are a user of Remodel It, you already know we use AI to determine the quality of each home on the market. This is compelling information to have at your disposal. Look at homes in the same neighborhood that are of a higher quality than the home your client is buying. Use these as comps of higher quality homes that may have been renovated recently. Take note of the styles and types of finishes used to provide the client with an even greater depth of information. Typically, homes with dramatically different styles than others in the neighborhood take longer to sell and result in a lower sale price. In the coming months, you will be able to use Remodel It’s quality adjustment slider to assess potential After Renovation Values (ARV). Understanding the home’s value once renovations are completed will help a flipper understand the budget constraints they must consider to make a profit on their investment and help a homeowner understand the value their renovations are creating. Taken together, you can use this data to help guide both the style and cost of your client’s renovations, dramatically increasing the value you provide as their agent and potentially saving them from a financial disaster, something for which they will be eternally grateful.
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