The Evolution of Pre-Sale Renovations: How the industry has changed over the past decade

Over the last decade, the landscape of pre-sale home renovations has undergone a transformation as significant as the shift from looking at a printed MLS book of homes listed for sale to searching for a home on your phone.

Just 10 years ago, the notion of pre-sale renovations was a hands-on, do-it-yourself affair, with homeowners deep cleaning and painting, determined to add a layer of polish before planting the "For Sale" sign in their yards. It was a grassroots approach, often complemented by the resourcefulness of forward-thinking real estate agents, that laid the groundwork for a revolution in the home-selling process.

This transition from a do-it-yourself ethos to a more sophisticated, turnkey service approach has significantly altered how modern real estate agents help homeowners prepare their properties for the market today.

Early days: The hands-on approach

In the early 2010s, the real estate industry's approach to pre-sale renovations was heavily reliant on the homeowner's initiative and investment. Investment-minded sellers would venture into substantial improvements, undertaking projects that ranged from kitchen remodels to adding a bathroom. Yet these efforts required not just financial outlay but also the orchestration of various contractors, from plumbers to electricians, when a homeowner was undertaking a home transformation.

The rise of agent-driven enhancements

During this time, some innovative real estate agents began to recognize the enormous value that pre-sale enhancements could bring to the closing table. These agents, with a keen eye for a property's potential, began offering to manage cosmetic improvements as part of their services. These agents coordinate for homeowners everything from deep cleaning services to providing professional staging. These services were then seamlessly integrated into the seller's closing costs, providing them the advantage of upfront funding, reimbursed to the agent upon sale.

Industry revolution: The emergence of Concierge services

The true paradigm shift began in October 2018, when Compass, a rapidly expanding brokerage firm, introduced its groundbreaking "Compass Concierge program." This initiative significantly departed from the status quo by offering home sellers comprehensive pre-sale cleaning and improvement services without any upfront costs. The only requirement was an exclusive listing agreement with Compass. While other brokerage firms like Redfin had dabbled in similar programs, their offerings were restricted to a limited number of markets. Compass Concierge, on the other hand, was a first-of-its-kind, wide-reaching service available in every one of the 22 major markets it then served. The move by Compass marked a significant shift towards a more homeowner-friendly model.

Startups paving the way

Following in Compass's pioneering footsteps, 2019 saw the emergence of specialized startups like Revive Real Estate. These companies dedicated themselves to refining and expanding the concept of home improvement services.

The difference? Pre-sale renovation firms provided access to a network of vetted, high-quality contractors or, in some cases, offered their own contracting services. By providing centralized budgeting, design, and project management, homeowners could experience a streamlined, hands-off renovation experience. For the first time, there was no cap on the extent of the renovations; the scale of the work was solely based on the projected return on investment and the agreed-upon budget plan between the renovation firm and the homeowner.

Pre-sale renovation services become a standard option

Today's pre-sale renovation firms have taken the concept to the next level. By covering all renovation expenses upfront, homeowners are freed from a potentially daunting financial burden. Now, the seller's journey to market is smoother and more strategic than ever, with no initial financial outlay from the homeowner. Once the home sells, the investment in renovations is recouped by the pre-sale renovation firm at closing.

Why do agents recommend homeowners use a pre-sale renovation firm?

In today's real estate market, the strategic advantage lies with modern real estate agents who embrace innovation. These agents know that instead of rushing to list a home for sale, they can help their sellers unlock the hidden value within their homes.

Among the specific benefits that a pre-sale renovation firm can provide include:

Enhancing home value through professional expertise

Using a pre-sale renovation firm brings the insight of professional designers and contractors to maximize the appeal and, consequently, the value of their property. These experts apply their knowledge of current local market trends and local buyer preferences to ensure that renovations will yield the highest return on investment. They can pinpoint which upgrades will add the most value, from kitchen remodels, bathroom tiling to flooring remodels, ensuring that every dollar spent is strategically invested.

Strategic financial planning with no upfront costs

One of the most important benefits to many homeowners is the financial flexibility a pre-sale renovation firm offers. Homeowners no longer bear upfront costs, worrying about what investments to liquidate, as the renovation firms cover all these expenses. This often allows for more comprehensive upgrades that might have been financially prohibitive. Because the payment for the improvements is deferred until the home sells, this alleviates any immediate financial pressure a homeowner would otherwise experience.

Market-ready homes are more desirable

Professionally renovated homes tend to sell faster as they are desirable to more buyers. Moreover, pre-sale renovation firms use market data and even artificial intelligence tools to align renovations with what's selling. This reduces the time a property spends on the market. A home that's been professionally updated and staged will often have a more immediate appeal to more potential buyers – especially Millennials who want move-in ready homes – and that leads to quicker sales.

Reduced stress and time commitment for homeowners

The renovation process can be overwhelming, with homeowners juggling multiple contractors and timelines. Pre-sale renovation services simplify this by managing the entire project, from initial design concepts to the final touches. The convenience factor cannot be overstated: a turnkey approach minimizes the homeowner's involvement, saving them time and shielding them from the stress of day-to-day project management.

Higher quality improvements

Because the top pre-sale renovation firms only work with vetted, professional contractors, homeowners can be assured of high-quality results. Moreover, established pre-sale renovation companies stand by their work, often offering guarantees or warranties. This assurance means that the work will not only be completed to a high standard but will endure.

Attractive and competitive property listings

A home with professional renovations will have a competitive edge in the market. These properties stand out in listings because of their newly updated features. The better a listing looks online, the more interest it can generate, leading to more in-person visits and, potentially, competitive bidding among potential buyers.

Customization to maximize profit

By tailoring their services to the unique aspects of each property, a pre-sale renovation firm ensures that the improvements made align with the homeowner's goals and the property's potential in its local market. This customized approach maximizes the likelihood of a profitable sale, as renovations are specifically designed to enhance the most valuable selling points of the home.

Home improvement has come a long way

What was once a patchwork of DIY efforts has evolved into a streamlined, digitally managed symphony of strategic improvements. Moving from the manual to the automated, pre-sale renovation is fueling a monumental shift in how homeowners today prepare their properties for the market with an eye on maximizing their home's value while minimizing their hassle.

What a pre-sale renovation path offers a homeowner is creating a more attractive home that appeals to buyers and sells quickly, with less effort and stress for the seller, and financial benefits that make strategic sense – and results in helping homeowners create more wealth.

Learn more about pre-sale renovations at revive.realestate/company/education.

Jessica Morrow, a seasoned real estate veteran, is Revive Real Estate Head of Operations. Revive's mission is to guide home sellers through presale renovations without upfront costs. Working with Revive, home sellers gain an average of $186,000 in additional profit when selling their homes.

Thank you to Revive for sponsoring this article on RE Technology!