In the 20 plus years I have been in the mortgage business and specializing in Renovation Lending, I have always promoted the technique of marketing homes with a renovation plan. Real Estate professionals can take the deficiencies of the homes they list and market the solutions to the deficiencies. It seems like 50% of listings have some statement of improvement needed or desired to turn the home into the best home for a buyer. Phrases like TLC needed, sweat equity, and sold as-is, are just some of the examples listing agents put in home descriptions every day.
A great sales professional provides a solution for any obstacle to that sale. In sales, great professionals will sell service, ease of use, and the benefits of the product to defend the investment or price of the product. In Real Estate sales, agents need to overcome obstacles to selling the home. My question for all real estate professionals is, how do you overcome items like those listed above, when a home needs a little something to make it more desirable? Are you providing solutions for that home sale?
Is the home being marketed with a solution to sell? Providing a solution to the obstacles will allow that home to sell faster. Not all homes will have these issues, but many homes which are available in all markets have some need for a solution. Develop a strategy for selling homes in need of a little or a lot of work.
What is the true cost of marketing a home in this manner? Is it better to market a home with a plan to sell it or just list the home, with all the deficiencies, and “hope” a buyer with vision may see the listing and look at the property? Providing the vision and solution for purchasing the home will open the pool of potential buyers, which will increase the potential to sell the home quickly.
So, how does one market a home with a plan?
The first step is identifying the home candidates where marketing with a renovation plan has the potential to make the home a more desirable product. This should be a relatively easy step for listing agents as they are identifying the issues as they list the home. See the phrases mentioned earlier in this post.
The second step is finding a solution. Marketing with a renovation plan is not just for gut rehabs. There are many homes listed which are genuinely nice homes, but have a tiny kitchen, outdated kitchen or bath, or a very compartmented design, IE small rooms. Often potential buyers can’t see past the way the home looks today, so good sales professionals will show the potential buyers the vision of the home.
The Virtual Room Design Center can provide a solution to this item. The Center will provide a professionally designed room, IE new kitchen, etc., which the sales agent can show the potential buyer. This viewing is not done on a computer or tablet, but is done with the use of inexpensive VR goggles, (less than $20) and the sales agents cell phone. This process has been explained in other posts on www.RenovationRealm.com. In most cases, for less than $200, the design is completed and sent to the agent for use. This VR design places the potential buyer in the new room, while they are still standing in the old room. It fully immerses the buyer in the new home and allows the buyer to “experience” the new home look now! The cost of $200 or less may seem to reduce net commission on the home sale, but if the process allows an agent to sell 1 extra home per month, the net is a large positive for the agent and using this process may lead to a lot more than just 1 extra sale per month.
Now the buyer can see the potential of the home, but how do they make it happen?
The third step is to combine this process with the use of a renovation loan, like the FHA 203(k) program or Fannie Mae HomeStyle program. Now before you close this article before completing it, let’s dispel some myths of these programs.
“Renovation loans are too hard and take too long to close”
A renovation loan is a little more difficult, so it is important for Real Estate professionals to partner with mortgage companies that understand the program and have experience with these programs.
These loans can take a little longer to close, but answer this. If a home is listed for 5 or 6 months and not sold and the listing needs to be extended or is lost all together, does it matter if a renovation loan takes 60 days to close? A home can be marketed with a plan, visualized using the virtual technology above and purchased using a renovation loan. The offer may be made 30 to 45 days or sooner into the listing. Does it really matter if the loan takes 60 days to close due to the renovation plan development? In this scenario, the home would close 90 to 120 days or less from the original listing, this is much faster than the listing growing stale, with no interest for 5 or 6 months or longer.
This is how this concept can help Real Estate professionals sell more homes. The process can help move homes faster with more potential buyers for all homes, not just gut rehab REO properties. Zillow reported in 2016 that buyers did some type of renovation work on a full 50% of all homes sold in 2016. How many more homes would have sold faster if the potential buyer pool was given the vision of the new home and provided a lending solution to get the funds to transform the home so the buyer can live in the desired new home within 6 months of purchase?
Great sales people provide great sales solutions. Learn about and use these techniques to take your real estate sales career to the next level.
More information on the Virtual Reality Room design process is available at www.RenovationRealm.com or at www.kepnerdevelopmentgroup.com/main/virtual-room-designs-for-real-estate-professionals.
Specific details on the VR Room Design Experience can be obtained emailing me at Insights@RenovationReal.com or KitchenSolutions@KepnerKitchens.com.
See you soon in the Renovation Realm.