How Technology Is Streamlining the Renovation Process for Homeowners (And Their Agents)

For decades, home flippers have been purchasing, improving, and re-selling houses primed for strategic renovations to maximize their return on investment, or ROI.

Most homeowners have never had access to what it takes to flip their home successfully until recently. A new category of firms specializes in home renovations, streamlining, and simplifying the process by leveraging modern technology.

One of the fastest growing areas in real estate today is pre-sale renovation, which essentially democratizes the home flipping process, giving every home seller the potential to flip their home and maximize their ROI.

Understanding pre-sale renovations

The concept of "pre-sale renovation" might seem new. Still, for years, many individual real estate agents have been helping their sellers by covering the upfront costs of minor improvements as well as professional staging of a home.

Homeowners also often self-funded home improvements before listing their homes for sale. Usually, the goal was to make a home market-ready to sell faster.

But diving into the DIY route for pre-sale renovations is fraught with challenges, as many homeowners would learn:

• Extended timelines: Homeowners often underestimate the time and energy renovations might take, discovering that significant delays can become common at several stages of the renovation, and the disruption in their lives can be substantial.
• Unplanned or hidden costs: Unexpected expenses, whether from discovering something not anticipated or changing plans, can inflate the budget quickly.
• Inexperience leads to mistakes: Lack of knowledge can result in choosing incorrect materials, overlooking the right improvements to make based on current market intelligence, or not accounting for needed professional assistance, such as a designer.
• Financial strain: Paying for a renovation out-of-pocket can be challenging for many, and resorting to credit can incur higher total costs, reducing the final ROI.
• Finding trustworthy contractors: A reputable and reliable contractor is crucial. Without one, homeowners risk subpar work that might not add the desired value or incomplete work if a contractor walks off the job.
• Navigating building codes and permits: Each locality has its regulations. Overlooking a necessary permit or not providing the correct information can lead to delays, fines, or mandatory changes.
• Safety risks: DIYing can pose a safety issue, especially when attempting electrical or plumbing work.
• No value addition: One of the biggest fears is undertaking the effort and costs, only to find it hasn't significantly increased the home's selling price.

As you can see, the challenges in going the DIY route are many, and these pain points spawned the pre-sale renovation movement we are seeing today.

Using a pre-sale renovation firm as a solution

Compass Real Estate was the first real estate brokerage to formalize the pre-sale renovation process and offer it to sellers throughout the markets it served back in 2018.

Still, many real estate agents and homeowners are in the dark about pre-sale renovation. It's about making strategic home improvements before listing the home for sale to get the best price possible.

Pre-sale renovation ensures a better net gain for the seller once the home is sold. Agents benefit because a higher sales price typically equates to a larger commission.

By handling everything from assessing what improvements will yield the highest ROI and having a design team to create a plan, a pre-sale renovation firm arranges the contractors and manages the entire process, often including securing materials, scheduling, and budget creation and maintenance.

Perhaps the most significant benefit to most homeowners is that there are no out-of-pocket costs when using a pre-sale renovation firm. The firm pays the expenses, which are reimbursed at closing.

Because technology is reshaping the pre-sale renovation landscape, by partnering with a reputed pre-sale renovation firm, agents are empowered with tech tools that eradicate the need for an agent-funded or homeowner DIY approach.

New technology is streamlining the renovation process

New technology, including artificial intelligence, enables pre-sale renovation firms to automate much of the process. The result is a more standardized and simplified home improvement process for agents and their seller clients.

At the core of this transformation is the use of machine learning and computer vision, making the planning and budgeting phase of pre-sale renovations a breeze.

Every seller aims to maximize their ROI, but understanding a property's current value, its potential value post-renovation, and the needed improvements to get there is required.

Previously, gathering this information was a tedious task, often taking several days. But, thanks to AI, agents can now get rapid insight into a home's current condition and potential post-renovation value. More importantly, using this new technology, agents can show a potential seller during their home listing presentation what a pre-sale renovation could mean to boost their final sales price.

For example, a new tool for real estate agents that is in beta testing uses property images to gauge its current worth and its renovation prospects. It then utilizes a renovation recommendation system, providing estimates rooted in budgets supplied by local contractors.

For agents, think smart CMA meets AI-powered AVM, delivering a more detailed foundation for discussions to help agents with their listing and pricing strategy when meeting with sellers.

The power of using this new tech – that delivers to a homeowner a renovation budget and potential ROI gain – in seconds, what previously took days, creates a "wow" factor that should help agents win more deals.

With these new technological advancements, agents can effortlessly discuss the benefits of waiting a little longer before listing with potential sellers. Showing sellers a comprehensive game plan on the spot is a conversation changer.

When sellers learn that everything is taken care of, including financing the improvements that are paid at closing, it creates a win-win for them and their listing agent.

Closing more deals

The real estate industry is rapidly undergoing a technological evolution because of AI, and nowhere is that more true than with pre-sale renovations. These advancements democratize the renovation process, enabling homeowners to leverage tools, capital, and strategies previously reserved for expert home flippers.

AI won't replace real estate agents in this new real estate area empowered by AI, but agents using AI will do more deals than those who don't.

Michael Alladawi, CEO and Founder of Revive, is a Southern California real estate veteran with a proven track record as a builder, investor, and respected home flipper. Michael created Revive to share his spectrum of knowledge and help homeowners maximize their profits when selling their homes.