Western Business Journal correspondent Jack Mize recently got to have a conversation with Rent Ready Contractors Founder Brant Phillips about the right and wrong things homeowners do when trying to prepare their house for sale.
WBJ: Hi Brant. Right now the real estate market is really active in Houston. A lot of home owners are ready to sell their homes, possibly for the first time, and a lot of them seem to think that they need to spend a lot of money on remodeling and repairs to get the highest dollar from buyers. Would this be an accurate assumption if that’s what they’re thinking?
BRANT: I would say absolutely not. I think in the last 5 or 10 years, with the HGTV type of shows that are on all the time, people have the misconception that they need to renovate or update their home in order to sell it. While I think it may be true in certain instances or certain markets where now, especially in Houston, it has moved more to a sellers’ market, you actually need to do less repairs.
We’ve worked with a lot of clients where we have honestly told them “Why not test out the market the way the property is now, get some feedback, and then make an assessment?” In the market that we’re in, you can definitely do less to get you home ready to sell and without spending top dollar. Of course, that depends on your neighborhood and where your house is. The general answer is don’t make the assumption that you need to spend more to get more because that’s certainly not the case in the market that we’re in right now.
WBJ: That’s really interesting. I want to make something clear. You had mentioned HGTV and I just want to be clear on what that is to the readers. You’re talking about all the home remodeling reality shows that are on cable?
BRANT: Yes, there are probably dozens of different shows like that. The Home and Garden Television (HGTV) network and a lot of the other networks have home remodeling shows and they’re very popular. The weekend warrior type homeowners are watching these shows fervently and feeling the need, or maybe it’s the desire, to do some of these home improvement projects on their home as well. This is great if it’s something that you just want to do or you enjoy doing, but it doesn’t necessarily translate into a good return on your investment or time.
WBJ: I guess it’s whoever gets the bug every now and then when they start to paint and get the carpet out. Let me ask you this: How can someone with a very limited budget get the biggest bang for their buck when they are updating their home for resale?
BRANT: I like to go in with that mind set: What improvement can we get the biggest return on? Start out with a limited budget, and then go from there. For some of the simple things, consult with some friends, or even better yet, several local real estate agents, to get their take on what stands out to them when they see your property.
What I suggest doing with your property is what I call the Pleasure and Pain Principle. You want to bring potential homeowners to a place of pleasure, such as “This is really nice, I can envision myself staying here or living here.” This doesn’t mean you need a total remodel, but what it means is that you want to remove some of the eye soars. In certain instances, it just may mean clearing up the landscape a little bit, adding some mulch. Don’t necessarily begin painting the entire exterior, but possibly paint or stain the front doors because that’s one of the most visual areas a potential buyer sees when viewing your home. They’re going to spend a couple of minutes at your front door while the agent is opening the lock box.
Start with some of the basics and then work your way up to bigger things. We call it three tiers of improvement: things that you must do; things that you should do; and then some wild factors that you can add. I’m not really talking about a bad roof or foundation. Some of those issues you would have to address. I’m talking about more of the simple things, such as if the painting is really outdated or the shag carpet needs to be replaced.
WBJ: That brings up a really interesting point because some people go in with that mind set and they start putting money in the wrong places. What are some of the things you see sellers spending money on for updates that they really think will add value because it appeals to their own taste, but it may actually hurt their sales price in the long run?
BRANT: We have done entire remodels and renovations for customers and immediately after their homes have sold for example we recently did one where we painted the entire home, inside and out and we used very neutral colors that are industry standard. I would say type of colours that the home builders use and the first thing that the new home owner did after they bought the home was repaint the entire home because they wanted different colors . We came to find out that the particular buyer had been eyeing the property from the beginning of the remodel and they were just waiting to put an offer on it. That’s was definitely an extreme example but an example where that seller probably could have done little or nothing and sold their house without investing the time or money to do the repairs.
WBJ: There are still a lot of people that repair or remodel their house it in a way that they would have like to have lived in it which seems kind of odd to me.
BRANT: Usually what we tell our clients to do is the must, should and wow. Do anything you must do. For example, the roofs or foundation should be repaired. Also, if you were in a neighborhood where all of the other homes have granite counter tops and you have some outdated counter tops, you might want to upgrade your counter tops. However, if you’ve already got good counters, perhaps some Silestone or some other type of hard surface counter top, but it’s just not you favorite color, then it probably wouldn’t be wise to spend the money to replace them because you think that another color is better or is going to sell faster. Some clients want to install a swimming pool to increase the home’s value. We have found this a huge mistake because there’s really no verifiable proof that adding pools adds values to homes.
WBJ: That’s a little extreme.
BRANT: For sure. Even adding decks may help increase your days on the market, but that’s also something people like to customize themselves when they move into a home.
WBJ: Let’s go to the other extreme based on what you were talking about a little earlier about the sellers who did all the remodeling and the buyers came in and just changed everything. What about the strategy of leaving the stained carpet and the purple walls and offer a concession or money back to reduce the price to cover the buyer to pick their own carpet and paint? Sometimes new home builders can do that. Do you see that as a viable option? Is that something that can save you money or time in selling your house?
BRANT: This may sound like I’m not even in the remodeling business, but I think that anytime there’s a possibility where you can save some money and save some time and save the headache of going through the remodeling experience: absolutely! You can test selling the property as is before making any changes. Of course, we have found that many potential home buyers aren’t so good at visualizing what a product or home will look like. We suggest potential clients talk to their agent and test it on the market. Agree on a set time and include in the listing that the seller will paint and update the carpet. Let them pick the carpet they want, or give them a concession on the contract. Have a set time frame it’s going to be completed, 30 days for example. The other thing that you can do if you have a good relationship with the contractor that you’re going to use, or you have an idea of some of the possibilities of the how and what it would look like after painting, is provide them some links to some finished products. Then say “If you want to take this option, our company will come out.” Or, they’ll say “This contractor is going to come out and paint, carpet, your install counter tops and here’s some picture of the work that they do.” That helps potential buyers to visualize and see what that home in its outdated condition could look with some paint and carpet.
WBJ: That’s a really good strategy and it gives people the option to have the house the way they want it when they purchase it. This has really been great information and so we’ll wrap this up to respect your time. Let me ask you this one final question if I could. What is the one thing you feel someone must consider in deciding where to spend their money when they need to sell their house at a fair price and in a reasonable amount of time? Not necessarily looking to sell it the fastest, but they don’t want it to sit on the market for a long time, and not if they’re looking for top dollar but they want to get a fair price in a reasoned amount of time, what the one thing they should focus on?
BRANT: I would try to keep it as simple as possible, just to stick to some of the basics. For example, for the outside of the house, clean up your landscaping and paint the front door. Some of the little things that catch people’s eyes on the inside of the house are the old outdated dingy electric sockets and switch covers, and maybe some old fashion gold lightning or gold door knobs. It’s better to go with an updated brushed nickel. I would make sure that all of the light bulbs in the house are working. Stick with the little things, things that you can probably take care of in a day or on the weekend just to remove some of the things that negatively tough potential buyer’s eyes. That’s what I would do, just stick to your basics a stick to a punch list that you can most likely take care of in a weekend.
WBJ: That’s fantastic, the things that catch people’s eyes when you see some houses and the electrical outlet plate is broken or cracked or missing, you see strings replacing chains that used to be there. Those are really simple and inexpensive things. Like you said earlier it doesn’t sound like you’re a remodeler in the fact that one would expect you to come in say “You need to redo the whole thing.” I certainly appreciate the frankness about what needs to be done and what doesn’t need to be done and I know that’s why you have such a great reputation with your clients is because you talk them out of giving you money sometimes which is the right thing to do. I appreciate you sharing that with us today.
BRANT: It’s been a pleasure.
Brant Phillips is a former Police Officer and Founder of Rent Ready Contractors in Houston, TX.
Primarily working with Real Estate Investors, Brant grew Rent Ready Contractors to the #1 Investment Property Contractor in the greater Houston area. He attributes that success to his companies commitment commitment and dedication to their clients Real Estate investing success.
You can find out more about Brant Phillips and Rent Ready Contractors at http://rentreadycontractors.com